WTW launches Illiquid Assets and Buyout Specialist Group

25 July 2023

WTW has launched a new group dedicated to supporting pension schemes managing illiquid assets in the run-up to buyout.

Drawing upon experts within WTW’s existing transactions and private markets businesses, the group takes advantage of the firm’s extensive experience in illiquid asset classes. This includes expertise in private equity, private credit, real estate and infrastructure, in combination with expertise in advising pension funds on all aspects of risk transfer transactions.

This follows an accelerated need for advice on the best route to achieve full scheme buy-in or buyout as wider events over the last twelve months have rapidly improved the funding ratios of many UK pension schemes – enabling the option of risk transfer for pension schemes sooner than was previously expected. On this newly accelerated timeframe, those pension schemes that are targeting buyout now face the question of achieving maximum liquidity in their investment portfolios much sooner than was previously planned, to enable a risk transfer transaction.

Traditionally, however, many illiquid asset classes such as real estate or private equity would not enable such a swift realisation of value before buyout.

Matching up the timeframes for illiquid asset disposal and risk transfer requires time and expertise for schemes to optimise the value achieved. However, with compressed timescales, it is also possible to achieve sufficient liquidity to enable a buyout transaction. Options include sales on secondary markets, negotiating the purchase of assets by the insurer involved in the risk transfer deal, deferring part of the premium payment to the insurer, or structuring a mutually beneficial purchase or loan agreement with the scheme sponsor.

The new group brings together the expertise of WTW’s Investments and Retirement businesses and will focus on delivering advice to pension schemes facing this new challenge.

Source: WTW