Phoenix looks set to rise to £800m flotation this month

PHOENIX Group, the closed life assurance business formerly known as Pearl, looks set for an £800 million flotation later this month if an expected agreement with entrepreneur Hugh Osmond is hammered out this week.

If it goes ahead, the Phoenix float would be one of the biggest UK stock market listings this year and a crucial test of whether investor appetite is returning after a volatile few months.

Phoenix has made no secret of its desire to list in London but has experienced complications around the "contingent rights" held in the company by Osmond's Sun Capital investment firm and TDR Capital, the private equity group.

But sources say an announcement could be made this week, possibly as early as today, that the contingent rights are to be swapped for shares in the newly-listed company, paving the way for the initial public offering.

Sources say Sun Capital and TDR may end up with 170m in new Phoenix stock if, as reported, ten contingent rights will equate to nine of the new shares via the agreement.

It follows months of negotiations between Phoenix chairman Ron Sandler, Osmond and TDR.

Sun Capital and TDR received the rights after they were forced to give up their 70 per cent holding in Pearl as part of an emergency rescue a year ago by Dutch and US investors.

Pearl had been brought low by crippling debts after its 5 billion takeover of rival closed life assurance fund, Resolution Life, in 2007.

This triggered its restructuring into Phoenix and the ousting of Osmond, a former owner of Punch Taverns and Pizza Express, and regarded as one of business world's leading financial engineers.

Sources say an announcement of a deal must be imminent because Phoenix must have the contingency rights ironed out by its scheduled annual meeting on Wednesday 23 June.

The latest the official notice for that meeting to go out is tomorrow – 21 days in advance.

City analysts argue a listing in London for Phoenix is desirable because of its poor stock performance on the Euronext exchange, which covers Paris, Amsterdam, Brussels and Lisbon, partly due to the shares' low levels of liquidity.

Bondholders in the company have already approved the move for a UK flotation after the successful restructuring of 500m of disputed subordinated debt in April.

It is believed changes to Phoenix's rules of association will need to be agreed at the annual meeting, with an expected flotation in the final week of this month.