Standard Life bosses flew back into London last night to begin persuading City investors to accept their £2.2bn sale of the savings giant’s Canadian business.
Chief executive David Nish and the head of its investment arm, Keith Skeoch, seem unlikely to face much opposition, if yesterday’s market reaction is anything to go by. Standard Life’s shares surged 8 per cent, or 31.1p, to 417.2p – perhaps little wonder after the company pledged to return £1.7bn to shareholders.
The deal means that, on average, the 1.3 million army of Standard Life investors, most of whom got their stock from the demutualisation eight years ago, will receive a £491.29 windfall.
While some investors will go out and spend the money, analysts said much of the cash is likely to be ploughed back into the stock market, providing a boost for other share prices.
The huge return of cash will be made in the second quarter of next year after first being approved by a shareholder meeting that is expected in October.
Mr Nish and Mr Skeoch will hold out a further carrot for investors when they begin their meetings today – the prospect of further takeovers with the rest of the proceeds of the sale to the Canadian insurer Manulife.
Standard Life bought the fund manager Ignis from the closed life insurance fund group Phoenix earlier this year for £400m, and the proceeds from the Canadian deal will allow it to fund further such deals in the future.
The company’s key strategy is to grow the amount of cash it manages in other pension and investment funds. After the Ignis deal, it manages £156bn of third-party assets – up 174 per cent from 2010.
The Canadian deal also includes a collaboration under which Manulife will distribute Standard Life Investments funds – such as its Global Absolute Return Strategies (GARS) fund – in Canada, the US and Asia.
Small shareholders make up 99 per cent of Standard Life’s investors by number and 54 per cent by value. BlackRock, Legal & General, State Street and Artemis Investment Management are among the big City investors.
Investors with more of a proud historical perspective on the famously Scottish business might mourn the sale of what has been one of Standard Life’s longest-established arms.
It first opened agency offices in Canada in 1833, just a few years after the company was founded in Edinburgh and nearly a decade before establishing its first office in London. Shareholders may be relied upon to remind Messrs Nish and Skeoch of this fact when they assemble to discuss the deal. However, in all likelihood, their wallets will triumph over their hearts.