Chesnara has agreed to acquire specialist life protection and investment bond provider, HSBC Life (UK), for £260m.

The deal is set to generate incremental lifetime cash of over £800m from HSBC Life (UK), and the firm is set to generate over £140m in the first five years following the acquisition.

The cash consideration has been funded through a combination of £55m of existing Chesnara internal cash resources, a £65m drawdown from the group’s increased £150m revolving credit facility, and equity raised via a fully underwritten rights issues at 176 pence per share.

The life insurance and pension consolidator, which is based in the UK and the Netherlands, said that the acquisition is set to potentially further value creation opportunities from additional expense and capital synergies, management actions and new business.

Furthermore, the takeover is expected to transform its UK scale by adding approximately £4bn of assets under administration and around 454,000 policies.

It is also expected to increase free float for Chesnara and its eligibility for FTSE 250 inclusion.

Chief executive officer at Chesnara, Steve Murray, said: "The proposed acquisition of HSBC Life (UK) represents a material step up in scale for Chesnara Group. HSBC Life (UK) is a high-quality business operating in products that we know well and is capable, under our ownership, of generating substantial cash flows for many years.

"This highly accretive transaction will allow us to build on our strong, 20-year track record of uninterrupted dividend growth. It is also a further example of a major financial institution choosing to work with us, enhancing our reputation as a leading life and pensions consolidator. We are continuing to see a strong M&A pipeline across our group which we are well-positioned to execute on.

"We look forward to welcoming HSBC Life (UK) policyholders and the HSBC Life (UK) team to Chesnara and working closely with HSBC Bank plc to ensure the smooth transition of the business into the group."

The acquisition is set to complete in early 2026, subject to customary regulatory approvals.

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