An analyst has tipped Standard Life Aberdeen (SLA) to make further acquisitions for its advice arm 1825 after the Phoenix mega deal.
In February SLA announced it would be selling its insurance division to closed-book consolidator Phoenix in a £3.2 billion transaction.
Following a meeting this week with SLA joint chief executive, Martin Gilbert, equity analysts at investment banking firm Jefferies said the Phoenix deal should leave SLA with around £4.3 billion of cash.
Out of this £800 million will be ring-fenced against debt, £1 billion will be needed for regulatory capital which would leave £2.5 billion for other options including for shareholder distribution and ‘in-fill acquisitions’.
The Jefferies note said the regulator would probably block any further major acquisitions for SLA but did suggest there could be more bolt-on deals for the advice arm 1825. The restricted advice business has made one acquisition this year so far, buying London-based Cumberland Place in January.
The Phoenix deal came a year after Standard Life announced its merger with Aberdeen Asset Management. According to the analyst note, integration of the asset management businesses ‘appears to be on track’ and the target of £250 million of cost savings after three years is expected to be met or even exceeded.
The note added SLA's net inflows in recent months have been ‘better than they [SLA management] originally expected’.
However these flows are facing a number of challenges, not least losing the mandate for £109 billion of Scottish Widows Swip funds which Jefferies expected to be moved away in the first half of 2019.
But the Phoenix deal also presents SLA with the opportunity to win more mandates.
Last month New Model Adviser® reported SLA would have the opportunity to pitch for further mandates within the £26 billion of Phoenix assets which SLA does not currently manage.
Jefferies also said Phoenix may make further acquisitions, supported by its new partner, and if this happens it could give SLA access to more funds to manage.
SLA declined to comment.