PE bid for RBS insurance

A private-equity consortium is being formed to examine a bid for Royal Bank of Scotland Plc’s insurance assets, including Direct Line and Churchill, put up for sale this week and valued at up to £10 billion pounds, according to the Financial Times.

Kohlberg Kravis Roberts and Apax Partners are expected to lead any consortium bid, with Lehman Brothers playing a supporting role, the newspaper added.

Although not yet finalised, the consortium could consider buying all or parts of the insurance assets.

Private equity groups though are likely to face stiff competition from a raft of trade buyers. However, they are unlikely to be competing with Peter Wood, the founder of Direct Line, the article continued.

Wood indicated that Esure, his joint venture with HBOS, was unlikely to be interested in the assets. The joint venture also prevented him from teaming up with a private-equity buyer.

“I have always grown businesses organically, not made any acquisitions,” he is reported as saying.

Wood, who founded Direct Line in 1985 with £20 million of funding from RBS, and left in 1997, said he was “very sad” at the bank’s decision to sell.