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LONDON - Chesnara plc announced Thursday it has entered into an agreement to acquire HSBC Life (UK) Limited for £260 million from HSBC Bank plc, in a move that significantly expands its UK presence.
The acquisition will add approximately £4 billion in assets under administration and around 454,000 policies to Chesnara’s portfolio, creating a combined group with approximately £18 billion in total assets and 1.4 million policies.
To fund the purchase, Chesnara is launching a fully underwritten rights issue to raise approximately £140 million, with the remaining amount covered by £55 million from existing cash resources and £65 million from an increased £150 million revolving credit facility.
The company expects the acquisition to generate incremental lifetime cash flows exceeding £800 million, with over £140 million during the first five years post-acquisition. This enhanced cash generation is anticipated to support a 6% increase in Chesnara’s final FY25 and interim FY26 dividends.
"The proposed acquisition of HSBC Life (UK) represents a material step up in scale for Chesnara Group," said Steve Murray, Chief Executive Officer of Chesnara. "HSBC Life (UK) is a high-quality business operating in products that we know well and is capable, under our ownership, of generating substantial cash flows for many years."
HSBC Life (UK) is a specialist life protection and investment bond provider, and is the second largest operator in the UK onshore investment bond market. The acquisition price represents 83% of HSBC Life (UK)’s Eligible Solvency II Own Funds as of December 31, 2024.
The rights issue will be on the basis of 10 new ordinary shares for every 19 existing ordinary shares at an issue price of 176 pence per share, representing a 40% discount to the closing price on July 2, 2025.
Completion of the transaction is expected in early 2026, subject to regulatory approvals. The acquisition is expected to increase Chesnara’s free float and potentially lead to inclusion in the FTSE 250 index.
The announcement was based on a company press release statement.
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