UPDATE 2-Partnership Assurance plans $1.54 bln UK share listing

Mon May 13, 2013 5:16am EDT

* Private equity owner Cinven reducing stake

* Company plans to raise 120 mln pounds to pay down debt

* Listing to value group at more than 1 bln pounds -source

LONDON, May 13 (Reuters) - Private-equity backed life insurer Partnership Assurance Group said it plans to go public in London next month, taking advantage of a recovery in listings to sell at least a quarter of its shares.

The sale could value the British company, majority owned by private equity firm Cinven since 2008, at more than 1 billion pounds ($1.54 billion) and is expected to complete before the end of next month, a source familiar with the matter said.

Cinven and company management will sell some existing shares in the offering, while Partnership also plans to raise 120 million pounds from the sale of new shares to pay down debt.

The company, which claims a 26 percent share of the 4.5 billion pound non-standard annuities market in Britain, also on Monday reported operating profit of 112 million pounds in 2012, a 42 percent increase on the year.

Partnership Assurance provides annuities offering higher annual payments to customers with medical conditions, as well as insurance to fund long-term residential care.

"Both of these markets are growing fast, and it is long term structural growth," Chief Executive Steve Groves told Reuters.

This growth is being driven by both an ageing population and a shift from defined benefit to defined contribution pensions, he said, with more people now buying annuities when they retire.

"Ultimately we are more of a growth stock. I would expect the proportion of shareholder return that came from dividends in the early years to be relatively modest," he said.

Groves said the company could also look at expanding internationally in the longer term.

Improving stock markets this year have encouraged a string of firms to test the water for initial public offerings, which began to show signs of a pick-up in the final quarter of 2012 after years of subdued activity due to the financial crisis.

Housebuilder Crest Nicholson and insurer esure Group were among those joining the stock market in London in the first quarter of this year.

"This is a natural next step for us," said Groves. "It is as an exciting time for a growth company to be coming to market."

Bank of America Merrill Lynch and Morgan Stanley are running the offering.

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