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Article | Investments Quarterly ideas Exchange

Three steps to optimise your illiquid assets on the way to buyout

July 27, 2023

WTW has been helping clients with these issues for many years and has a tried and tested three step process with illiquid assets experience that ensures the best possible outcome for the scheme
Investments|Pension Board and Trustee Consulting|Retirement

Illiquid assets have played a key role in generating crucial returns for UK pension schemes over the last decade. However, with many schemes now ready to buyout several years ahead of schedule, for lots of trustees and sponsors the most challenging part of navigating that final stage of the journey is what to do about those illiquid assets. WTW has been helping clients with these issues for many years and has a tried and tested three step process with illiquid assets experience that ensures the best possible outcome for the scheme.

Step one: a transaction liquidity assessment

For clients in this scenario, we recommend undertaking a Transaction Liquidity Assessment to understand the best approach for each holding. Combining WTW’s years of experience assisting clients with secondary market sales with our deep knowledge of the insurers in the buy-in and buyout market, we can advise you on 3 major topics:

  1. Whether the holding needs to be disposed of, based on its run-off profile and the scheme’s journey plan, allowing for the potential to use a deferred premium structure with the insurer;
  2. Where the holding needs to be disposed of, an initial recommendation of the optimal approach to take, from: immediate secondary market sale; in-specie transfer to an insurer; a loan from the sponsor; delayed secondary market sale or a more innovative solution (such as restructuring the asset);
  3. An initial view on how and which brokers should be engaged as well as indicative pricing for any secondary sales.

Step two: illiquid secondaries and insurer market engagement

We screen, evaluate, and select brokers with the necessary expertise to achieve the best outcome. As a result of our experience, we have a network of brokers and global reach to help clients with their specific situation based on the type of illiquid assets they own and the constantly evolving market dynamics at the time. Additionally, having existing NDAs and the ability to negotiate preferred terms with brokers, saving you time and money.

This phase is crucial – the difference between selecting an appropriate broker with the right expertise could have a significant impact on the sale price.

For illiquid assets that will be attractive to an insurer, we will engage with the insurers on your behalf to negotiate the most attractive possible pricing for an in-specie transfer, leveraging our deep relationships and experience of negotiating similar transactions. Crucially, this must be completed holistically with the overall buy-in premium to ensure the best outcome is achieved. Where required we can also negotiate appropriate deferred premium structures with the insurers. Our Transactions teams’ latest survey of each insurers’ offerings on deferred premiums demonstrates that the art of the possible has significantly widened here over recent months.

Step three: implementation and process management

Whichever implementation route is chosen we will help clients manage this process from start to finish. This includes managing the due diligence process, liaising with brokers, insurers, and counsel throughout the process on your behalf ensuring your interests are protected at every stage.

This can be a complex process including liaising with multiple parties, agreeing appropriate legal documentation, and managing execution risk.

We will use our experience to remove the burden from the Trustee and ensure the process is carried out as quickly and efficiently as possible.

The toolkit

Immediate secondary market sales

In-specie transfers

Sponsor loans

Structured secondary market sales

Asset restructurings

Insurer eligibility and pricing assessments

Preferred broker engagements


Head of Private Markets Solutions
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Managing Director, Transactions

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