'Applegarth Firm' Eyes Co-op Insurance Bid
The private equity group advised by Adam Applegarth, the former boss of Northern Rock, is wading into another troubled situation: a £1.5bn effort to fill a blac khole in the balance sheet of the Co-operative Bank.
Sky News understands that Catalina Holdings, a consolidator of general insurance firms that is backed by Apollo Management, is among the initial bidders for the Co-op's insurance business.
The unit has been put up for sale as part of the mutual's efforts to raise £1.5bn, under orders from the banking watchdog.
It is said to have attracted the interest of a range of financial and trade bidders, although there is only lukewarm interest in acquiring the whole business, City sources said.
Apollo, which invested in Catalina earlier this year, appointed Mr Applegarth as an adviser months after his exit from Northern Rock in the wake of the bank's nationalisation in 2008. He is not thought to be directly involved in the Co-op situation.
Among the other bidders are understood to be Anacap, a specialist financial services investor which last week lost out with an attempt to acquire 314 branches from Royal Bank of Scotland. Separately, Advent International has been working with the former chief executive of RSA Insurance, Andy Haste, on a possible offer for the Co-op arm.
Its proposals to fill a £1.5bn black hole in the balance sheet of the Co-operative Bank, which were approved by the industry regulator in June, have angered bondholders who will be forced to take a significant hit on the value of their investments.
The Co-op's new chief executive, Euan Sutherland, has insisted that he will not sell any of the mutual's other assets, including the Funeralcare arm, which has also attracted interest from buyout firms.
His ability to resist such offers may, however, depend to a degree on the price he is able to command for the general insurance unit, with analysts' estimates varying over its value from £250m to as much as £600m.
Deutsche Bank is handling the sale on behalf of the Co-op, whose life insurance operation has already been sold to Royal London for nearly £220m.
The mutual declined to comment, while Apollo could not be reached for comment.