Standard Life Aberdeen will retain its UK retail platforms Standard Life Wrap, Elevate and Parmenion and its advice business, which includes the growing Financial Planning arm 1825.
Standard Life also confirmed today that chairman Sir Gerry Grimstone will step down at the end of 2019 and three other directors will also leave at the next agm.
Legacy business consolidator Phoenix says the deal will make it the “pre-eminent closed life fund consolidator in Europe.” The takeover is expected to be concluded by the third quarter.
The acquisition creates a bigger Phoenix group with £240 billion of legacy assets and 10.4 million policyholders. Standard Life will continue to manage most of the SLA assets.
Phoenix says there is significant potential for “cost and capital synergies” including annual cost savings of £50 million per annum although it will retain the Edinburgh main office for SLA.
The deal will be financed by £1.97bn in cash and the issuance to SLA of shares in Phoenix representing approximately 19.99% of the enlarged share capital of Phoenix following completion. A dividend will boost the total sale revenue for Standard Life Aberdeen to £3.2bn.
The ‘strategic partnership’, as Phoenix refers to it, includes enabling Phoenix to underwrite and provide policy administration for SLA workplace pensions and Retail SIPPs and drawdown products.
Sir Gerry said of the deal: "This transaction completes our transformation to a capital light investment business, a process started in 2010 with the sale of Standard Life Bank, continuing with the sale of our Canadian business and the merger last year between Standard Life and Aberdeen Asset Management.
“This transaction represents excellent value for our shareholders, including a comprehensive and mutually beneficial strategic relationship entered into with Phoenix Group, a longstanding partner of the firm. In addition, I am particularly pleased to note Phoenix Group's commitment to maintain operational headquarters in Edinburgh."
Standard Life Aberdeen also announced its 2017 results today which reveal investment management assets under management of £158bn.
Standard Life Aberdeen says it remains committed to being a major platform player. It retains Parmenion, an Aberdeen purchase, and says it believes it is the largest provider of adviser platforms in the UK with £58bn of assets serving over 3,000 adviser firms. Its UK Retail Platforms have grown AUA by 353% over the last five years, generating net flows of £24.6bn at an annualised rate of 35%.
Standard Life Aberdeen also plans to continue to expand its 1825 financial advice business, which offers a Financial Planning and personal tax advice service. Standard Life Aberdeen has acquired four adviser firms so far bringing total assets under advice in 1825 up to £3.6bn.