Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Standard Life offers £1.75bn Canadian windfall

7 comments
Standard Life offers £1.75bn Canadian windfall

Shares in Standard Life (SL) soared 10% close to an all-time high after the pension and investments group sold its Canadian business for £2.2 billion (about C$4 billion) and promised to pay shareholders £1.75 billion in a special dividend. 

Standard Life is selling the business to Manulife, Canada's biggest insurer, which wants to grow in Quebec where Standard Life has been strong. The two companies will also expand an existing partnership to distribute Standard Life Investments' (SLI) funds in Canada, the US and Asia, which is hoped will treble SLI's assets under management in three years.

The 73p per share special dividend will bring to £1.47 the total dividends and payouts Standard Life shareholders have received since 2010. It will be paid through a 'B/C share scheme' which makes the payment more tax efficient for UK shareholders who can choose whether to receive the money as capital or income. After the deal, Standard Life plans to consolidate, or reduce, the number of its shares. 

Standard Life shares jumped 36p to 422p, close to their peak in May last year, as analysts welcomed the surprise move to shift a formerly loss-making business at 19.5 times earnings.

Alan Devlin, an analyst at Barclays Capital, said: 'We believe Standard Life owns some of the most attractive assets in UK life insurance but were concerned that there remained a large book of mature products, including Canada, which would temper earnings growth. The sale of its Canadian operations to Manulife removes one of the drags to growth, at an attractive valuation.'

Eamonn Flanagan of Shore Capital gave 'full marks' to Standard Life for exiting a business with C$52 billion of assets whose retirement products carried significant interest rate risk for the company. 'The disposal accelerates Standard Life's strategy of asset gathering and asset management and removes a major exposure of the group's balance sheet to spread and guarantee risk in our view,' he said.

It follows Standard Life's recent acquisition of Ignis Asset Management which boosted its presence in commercial property and bonds.

David Nish (pictured), group chief executive of Standard Life, said: 'This transaction provides our group and its shareholders with significant strategic and financial benefits. It accelerates our growth and reduces capital-intensity, while delivering substantial value today.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play JPM’s Negyal: Back divis to temper EM volatility

JPM’s Negyal: Back divis to temper EM volatility

Omar Negyal, co-manager of the JPMorgan Global Emerging Markets Income trust, says a dividend approach to emerging markets reduces the volatility of investing in the asset class.

Play WMR: Why Russia will lose this war

WMR: Why Russia will lose this war

Author and journalist Adam Lebor believes a perfect storm is brewing when it comes to the Russian economy. .

Play WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

Chief economic adviser to London mayor Boris Johnson outlines the geo-political risks in Asia and explains why the risk of another eurozone crisis must not be underestimated.

Your Business: Cover Star Club

Profile: The adviser that tempted Robin Minter-Kemp on board

Profile: The adviser that tempted Robin Minter-Kemp on board

It is rare to meet an impassioned individual who is willing to bang the drum for investment advisory right now

Wealth Manager on Twitter