Pressure on LV adoption sharks is growing

Kwasi Kwarteng is the first government minister to intervene in the controversial LV acquisition when he urged the insurer’s bosses to clean up the deal.

The Secretary of Commerce yesterday backed Labor MP Gareth Thomas’ call in Parliament for LV to reveal how much it is paying advisers for the £ 530m deal.

His comments came after a dispute broke out between LV and Royal London, a rival life insurer that had hoped to buy the company but was snubbed by Bain in favor of the buyout barons. Mr Kwarteng’s intervention could bring him into conflict with Malik Karim, the Tory treasurer and founder of the city investment bank Fenchurch Advisory Partners.

Fenchurch is a key adviser to LV on its sale to US private equity firm Bain Capital and will collect a multi-million pound fee for its work, the Daily Mail announced last week. So far, LV and Fenchurch have declined to disclose the level of consultant compensation. Other firms involved in the transaction are City Spinners FTI Consulting and the law firm Clifford Chance.

Kwasi Kwarteng (pictured) is the first government minister to intervene in the controversial LV acquisition when he calls on the insurer’s bosses to clean up the deal

When asked by Mr. Thomas to indicate to LV how much of their members’ money was being spent, Mr. Kwarteng said he was “particularly interested in this deal.” He said, ‘I think so [Mr Thomas] is absolutely correct, I think that people who are shareholders, people who are customers, have every right to transparent data. I would be very supportive of that. ‘

Barry O’Dwyer, chief executive of Royal London, which submitted a competing bid, said Bain’s bid for LV caused “near universal consternation” and was unlikely to be voted on by members. LV boss Mark Hartigan hit back, accusing Royal London of throwing a “hand grenade” into the takeover and branding the company’s claims as “grossly misleading”.

The sale of LV, officially known as Liverpool Victoria, has angered MPs across the political divide.

Founded in 1843, the company has always been reciprocal – that is, it is owned and run to its customers’ benefit. But now the company bosses want to sell LV to Bain, a greedy US investor who would demutualize the historic business.

The sale of LV, officially known as Liverpool Victoria, has angered MPs across the political divide. Pictured: Malik Karim, Conservative Party’s treasurer who could raise millions from the LV takeover

Many of LV’s 1.2 million members who will vote on whether the deal goes through have written to the mail expressing dismay at the Bain deal.

Last week, Royal London, also a mutual, wrote to LV’s board of directors to revive its bid for the company it had given up last year.

On Radio 4’s Today broadcast yesterday, Mr. O’Dwyer said, “The almost universal dismay that has welcomed this” [Bain] Proposal means that I think there is now a significant risk that Members will not support this proposal. ‘ But LV released a statement yesterday slamming Royal London.

The company was said to have been “grossly misleading” in suggesting that LV remain a mutual in the competing bid.

But Royal London hit back, claiming it was open to talks with LV and Bain that would allow it to buy the insurer and keep their mutual status.

As the clock fight continued, Mr Hartigan accused Royal London of “firing a hand grenade to disrupt the process”. LV members have until December 8th to vote on the Bain deal. You can also vote at an online general meeting on December 10th.

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