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In a blockbuster move that could reshape the U.K. life insurance landscape, Chesnara PLC announced Thursday that it has inked a £260 million ($355 million) deal to acquire HSBC Life (UK) Ltd., marking a bold leap in scale and ambition for the FTSE All-Share-listed pensions consolidator.

The strategic acquisition, which is subject to regulatory approval and expected to close in early 2026, would add 454,000 new policies and £4 billion in assets under administration, pushing Chesnara’s total to 1.4 million policies and approximately £18 billion in assets.

Financing the Deal: Cash, Debt, and Deep Discount Equity

To fund the acquisition, Chesnara will deploy a three-pronged financial strategy:

• £55 million from existing cash reserves

• £65 million in new debt

• £140 million via a rights issue involving nearly 80 million new shares priced at 176 pence each, a steep 40% discount to the firm’s recent closing price of 293.5 pence.

This deep-discount equity raise is underwritten by RBC Europe Ltd. and ABN AMRO Bank NV, with Panmure Liberum acting as joint bookrunner. The new shares are slated to begin trading on the London Stock Exchange on July 23.

Strategic Ambition: A Bid for the FTSE 250

Calling the move “strategically compelling,” Chesnara CEO Steve Murray emphasized the transformational nature of the deal:

“This represents a material step up in scale for Chesnara Group. 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.”

The acquisition could also qualify Chesnara for inclusion in the FTSE 250 index, potentially lifting its market profile and share price.

HSBC Life: A Powerful Player in Investment Bonds

According to Chesnara’s statement, HSBC Life is the second-largest operator in the U.K.’s onshore investment bonds market, offering individual protection products such as life insurance, critical illness coverage, and income protection.

Policyholders from HSBC Life would migrate to Chesnara’s platform once the deal is finalized, expanding Chesnara’s footprint in a segment it already knows well—life and pensions consolidation in the U.K. and the Netherlands, along with new business lines in Sweden.

Legal Teams and Prior Moves

Pinsent Masons LLP is advising Chesnara on the deal, with partners Walter Clark and Hannah Brader leading the legal team. Counsel for HSBC Life, a subsidiary of banking titan HSBC, was not immediately disclosed.

This move follows Chesnara’s May 2023 acquisition agreement with Canada Life Ltd., signaling an accelerating expansion strategy.

If the HSBC Life acquisition fails to receive approval, Chesnara stated it would retain the equity proceeds for other commercial purposes or alternate acquisitions within a 12-month window.

Neither Chesnara nor HSBC immediately commented on the announcement.