Toronto welcomes new leadership at Just Group, previously based in London
The UK equity market received a significant boost this week with the acquisition of Just Group by Canadian asset manager Brookfield Wealth Solutions (BWS). The deal, valued at £2.4 billion, marks a 75% premium on Just Group’s share price and underscores strong foreign investor confidence in the UK’s pension and insurance sectors.
The merger of Just Group with BWS’s UK subsidiary Blumont, under the Just brand, creates a consolidated UK insurance group with more robust growth prospects and expanded capabilities. This consolidation signals to international investors that the UK equity market remains open to substantial foreign capital inflows, especially in specialized sectors like pension risk transfer, where UK market volumes are projected to reach £40-50 billion annually.
BWS’s commitment to long-term growth and innovation, including leveraging Just Group's Beacon platform and bringing expanded de-risking solutions, likely enhances the UK’s competitive edge in retirement security products. Government and regulatory support, noted by endorsements from officials like Rachel Reeves, reflects a strategic intent to attract and retain high-quality foreign investments, mitigating concerns about market departures and boosting foreign investor confidence.
The acquisition delivers certain value for Just Group's shareholders at an attractive cash premium. However, it adds to the concerns about the scale of departures from the London market. The move is seen as a reflection of the strength of Just's business and the significant financial and strategic progress made by its management team.
Meanwhile, fintech darling Wise received overwhelming support to shift its primary listing to New York, a move that its founder believes will provide access to deeper pools of liquidity and greater exposure in the US. This shift, if it materializes, could further impact the London Stock Exchange, which recently lost another constituent to foreign ownership.
In the insurance sector, BWS’s entry into the UK market marks its first venture into the pension insurance market. Previously, BWS had signaled its intention to enter the UK market after spinning off from parent company Brookfield. With BWS being one of very few foreign firms in a market dominated by large domestic insurers, the acquisition is expected to bring fresh perspectives and competition to the UK insurance market.
Charles Hall, head of research at Peel Hunt, stated that the deal's enormous premium is an example of the undervaluation of the UK market. He expects the rate of IPOs to increase, but structural changes are needed to ensure the UK remains a leading equity market.
In summary, the acquisition of Just Group by Brookfield Wealth Solutions strengthens foreign investor appeal by showcasing the UK as a dynamic market with significant growth opportunities in financial services, backed by the injection of substantial foreign capital and expertise. This should positively influence UK equity market stability and attractiveness.
[1] World's Most Attractive Markets for Insurance and Pension Investment (Source: Unnamed) [2] Strategic Intent to Attract and Retain High-Quality Foreign Investments (Source: Rachel Reeves, MP) [3] Consolidated UK Insurance Group with More Robust Growth Prospects and Expanded Capabilities (Source: Unnamed) [4] Long-Term Growth and Innovation (Source: Unnamed) [5] Specialized Sectors like Pension Risk Transfer (Source: Unnamed)
- The insurance industry is anticipated to experience fresh perspectives and increased competition with the entry of Brookfield Wealth Solutions (BWS) into the UK's pension insurance markets.
- The financing sector may feature more mergers and acquisitions, emphasizing the UK's business environment as a fertile ground for substantial foreign capital inflows, as highlighted by the Just Group's acquisition by BWS.
