Partnership mulls debt issue to fund product development

Debt issues, such as bonds, are not uncommon among listed firms as a way to raise funds, especially if the issuance of new shares might be considered an unattractive alternative.

Since the radical pension reforms were announced in the Budget, Partnership and other specialist annuity providers have seen their share price plummet. On the day of the speech Partnership’s share price fell by 55 per cent as it shed £700m in value.

At the time of writing its shares are currently priced at 134.70 pence, down 75 per cent from its high watermark since its summer 2013 listing of 528 pence in July of that year.

Partnership said in an announcement that it has mandated Bank of America Merrill Lynch and Royal Bank of Scotland to arrange a series of fixed income investor meetings, starting tomorrow (8 January), to assess a sterling-denominated subordinated debt transaction issued by Partnership.

The firm emphasised that it is not certain whether a debt transaction will occur, however the provider believes it is in shareholders’ best interests to explore opportunities to provide the financial flexibility to invest in “new initiatives” and to diversify the group’s sources of funding.

Its results, published in October, revealed that the firm was focusing on “diversifying our business model and positioning it for the new retirement market is undiminished”.

Steve Groves, chief executive, said: “Partnership currently has no debt and it is therefore logical to explore the opportunities to diversify, optimise and strengthen our robust capital position with a prudent amount of leverage. We will update the market in due course.”

In June, Partnership announced that approximately 100 roles across its London and Redhill offices would be cut as part of cost savings further to those outlined in early 2014. The proposals are expected to generate annualised cost savings of £21m in 2015.

donia.o’loughlin@ft.com