Clara-Pensions (Clara), the member-first consolidator for defined benefit pension schemes, the Wates Group (Wates) and the Trustee of the Wates Pension Fund (the Fund), have reached agreement on the UK’s third superfund transaction. This represents the first superfund transaction conducted with a scheme with an active sponsor, paving the way for many more companies to successfully transfer their pension liabilities while enhancing member security.
The 1,500 members of the Fund and the scheme’s £210m in assets will now come under Clara’s management where members will continue to receive their pension entitlements.
Under the terms of the transaction, Wates will contribute an additional £19m of funding to support the scheme in the form of a one-off payment and Clara will provide additional capital to enhance the security of members’ benefits. As a family-owned business, Wates, together with the Wates Trustee, is committed to ensuring its members are fully cared for under Clara and will have increased certainty they will receive their pension entitlements. Under Clara’s model, members ultimately transfer to an insurer through a buy-out process after spending 5-10 years with Clara.
This is the first superfund transaction to be completed by an active business and demonstrates the wide range of schemes which can benefit from the Clara solution. With a strong pipeline of potential deals, with schemes that have liabilities of over £5bn, this transaction reflects Clara’s continued evolution as the business adds to its existing 20,000 members and £1.2bn of assets under management.
Clara was advised by legal firm Osborne Clarke, continues to be backed by global investment firm Sixth Street and was supported in its due-diligence by Heywood Pensions Technologies. The Clara Trustees are supported by pensions consultancy Hymans Robertson; fiduciary managers Van Lanschot Kempen and State Street; and legal firm Eversheds.
Wates was advised by PwC and CMS, while the Trustee of the Fund was advised by LCP, Macfarlanes and Cardano, a business of Marsh McLennan.
Matt Wilmington, Chief Transaction Officer of Clara-Pensions, said: “This is another exciting day for Clara, as well as for Wates, the Wates Trustee and, most importantly, our new members. Working with Wates, whose commitment to the care of its former and current employees was to the highest standard, has been a true pleasure. We welcome the company’s willingness to engage in this sponsor-driven transaction model, which enhances the security of member’s benefits. It was fantastic to work with the advisors on all sides, whose collaborative and can-do approach all made this transaction possible.
“At Clara, our pipeline has never been so healthy, with over £5bn of liabilities currently under active discussion. We are immensely proud to have completed our first transaction of this type, demonstrating to active businesses that Clara is a great option for both them and the members of their legacy pension schemes. We expect this transaction to pave the way for more sponsors seeking to enhance the security of their employees’ and former employees’ benefits by entering Clara.”
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