CVC seen in lead in talks to buy Friends unit

By Simon Challis and Clara Ferreira-Marques

LONDON (Reuters) - Private equity firm CVC Capital Partners CVC.UL is in the "leading position" in talks to buy high-end insurer Lombard, a unit of Friends Provident (FP.L), sources close to the matter said on Friday.

U.S. private equity firm Hellman & Friedman has also been named as a suitor for Lombard, but Swiss Life (SLHN.VX), formerly seen as a potential front-runner and the only trade buyer, said last week it was no longer considering making a bid.

Friends said earlier this year it was looking to sell Lombard, a Luxembourg-based specialist that offers wealth management products for rich individuals, as part of a root-and-branch review of its business -- just three years after buying the insurer to boost its international profile.

The smallest bluechip life insurer has been in the throes of a strategic overhaul since it scrapped key growth targets last year and a planned 8.7 billion pound merger with rival Resolution fell through.

Friends bought Lombard in 2005 for around 400 million pounds, including earnout clauses.

One of the sources familiar with the matter said on Friday that offers so far have been around 450 million to 600 million euros (479 million pounds) -- well below the 700 million pound price tag some industry analysts had put on the unit.

A swift deal for Lombard, which Friends has earmarked to sell alongside intermediary Pantheon and its majority stake in F&C Asset Management (FCAM.L), could help appease shareholders, who would receive the proceeds of any disposals.

A sale could also help lift Friends' share price, down 48 percent since the start of the year, and may boost the prospects for its current management team led by executive Chairman Adrian Montague, under pressure over the review and his handling of a failed takeover approach from U.S. buyout group JC Flowers.