Luxembourg investment fund is in exclusive talks about a deal to invest £400m of new capital in Pension Insurance Corporation.
The specialist investment fund, Reinet, is in exclusive talks with the insurer's parent company, Pension Corporation, about the deal, which could see it take a 30% to 40% stake in PIC.
Pension Corporation is owned by investors including J.P. Morgan, JCFlowers, Istithmar World and Swiss Re.
In its consolidated audited financial results for the year ended 31 March 2011 - published today - Reinet Investments said: "Reinet Fund is in exclusive negotiations with Pension Corporation and its key stakeholders for a transaction involving the re-organisation of its capital structure and an investment by Reinet Fund of approximately £ 400m through which it would become a principal shareholder in the business.
"Completion of any transaction is subject to the successful conclusion of these negotiations and to regulatory and other approvals. Further information regarding the status and details of this potential investment will be communicated to our shareholders at the appropriate time."
Pension Insurance Corporation Holdings chairman Sir Mark Weinberg said: "As a stable long-term investor, we believe that the Reinet proposal will be attractive for the current and future customers of Pension Insurance Corporation.
Earlier this week, the pensions consultancy Hymans Robertson estimated that up to £20bn of these "pensions buyout" deals could be done in the next 18 months. Broadcaster ITV and carmaker Bentley are believed to be investigating the prospects for longevity swaps, a related type of deal that covers pension-funds against the risk their members will live longer than currently predicted.
Truell said the extra money would mean Pension Corporation could start talking seriously with the UK's very biggest pension schemes. He said: "With that amount of capital we would be confident going to talk to a £2bn, £3bn size pension scheme, whereas before a deal with one of those would have pushed us right to the wire."
He also added that none of Pension Corporation's other backers have pulled out, and Reinet is looking to sign up for "the long term". The deal would make the Luxembourg-listed fund one of Pension Corporation's biggest shareholders, alongside others like JC Flowers, Lloyds Banking Group and Swiss Re.
Truell's acquaintance with the wealthy Rupert family goes back to the early 1990s, when he was working for the boutique investment bank Hambros. He worked on splitting their Richemont business, which then held investments in watchmaker Cartier, tobacco group Rothmans and menswear Alfred Dunhill amongst other firms, into two groups, one focused on tobacco and the other on luxury goods.
Johann Rupert, chairman of Richemont and of Reinet, also knows Pension Corporation group chairman Sir Mark Weinberg through business and finance circles in South Africa, from where they both originate.
The €2.7bn Reinet Fund was originally founded to look after the Rupert family's remaining financial interest in Rothmans, and then later in British American Tobacco when the former was merged with it in 1999. Originally holding a 23.3% stake, it has been steadily reducing that in the decade since and diversifying into other investments.
investment would augment our existing capital resources, enabling PIC to maintain a market leading position in what we believe is a rapidly growing market for pension insurance and risk transfer."
The Reinet Fund is a specialised investment fund incorporated in Luxembourg. At 31 March this year, its net asset value was over €2.7bn (£2.3bn).
PIC currently has over £4bn in assets and has insured more than 50,000 pension fund members.