MARK WOOD, the chief executive of pension buyout firm Paternoster, has begun to sound out his investors about raising an additional £500m of capital to fund more deals.

Paternoster’s two biggest shareholders, Deutsche Bank and New York hedge fund Eton Park, have been approached about their interest in supporting a rights issue in recent weeks.

The firm’s other major shareholders include Polygon, the London-based hedge fund.

The fundraising would double Wood’s original war chest.

It is understood that a slew of blue-chip institutions, including Blackrock, Fidelity and Schrod-ers, have also been lined up as potential investors.

The fundraising move comes amid booming interest in the pension buyout market, which has attracted a number of new entrants in recent years.

Roughly £2.25 billion of British pension assets are expected to change hands in the first quarter of 2008 – more than in the previous 12 months.

Wood acquired £1.7 billion of pension assets in his first 18 months through 33 deals, sapping much of his seed capital.

Other new entrants to the pension market have struggled to get off the ground.

Goldman Sachs, which launched its pensions business 18 months ago, is about to complete its first deal with the acquisition of the £700m Rank pension scheme.

Synesis Life, the pension buyout firm set up by Isabel Hudson, formerly Wood’s deputy in the UK life division at Prudential, has also yet to do a deal.

Pension Insurance Corporation, owned by Edmund Truell, has come under fire from the pensions regulator over his takeover of Telent, the rump of the former Marconi telecoms-equipment business.

The regulator appointed independent trustees to the Telent scheme after Truell launched a takeover offer for the company as a means to acquire its pension-fund assets.

An amendment to the Pensions Bill, passed in the House of Commons last week, has given the regulator more powers to install new trustees, wherever it is deemed “reasonable”.

Industry sources claim the move threatens Truell’s business model, which has been based on buying companies to acquire their pension schemes.

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