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March 23, 2014 7:13 pm
Standard Life is in talks to buy Ignis Asset Management in a move that would accelerate consolidation in the UK fund management sector.
The Edinburgh-based life insurer, which last year began to manage more investments for outside clients than its own policy holders, said that it was in advanced talks with Phoenix, the owner of Ignis, to buy the unit.
A sale by Phoenix, a life assurance vehicle chaired by economist Sir Howard Davies, would allow the company to reduce its £2bn of net debt, and press ahead with a strategy of buying up life insurance businesses that are closed to new customers.
Analysts have estimated the value of Ignis at about £400m, meaning a sale by Phoenix would move it closer towards its aim of cutting its leverage, measured as debt to embedded value, to below 40 per cent by 2016.
Standard Life’s move for Ignis, which has £67bn of assets under management, making it one of the UK’s largest investment managers, comes amid a spate of other deals in the sector.
Aberdeen Asset Management has struck a £660m deal to buy the fund management business of Scottish Widows, while Bank of Montreal is in the process of buying F&C Asset Management. Last year Schroders, another rival of Standard Life, bought up Cazenove Capital.
By strengthening its fund management business, Standard Life would be further realigning its core business away from an 188-year history as a life insurer towards managing investments for outside clients.
The company said last year that for the first time its investment arm was investing more money for third-party accounts than for its own policyholders.
Phoenix, meanwhile, which was previously named Pearl and built up before the financial crisis by entrepreneur Hugh Osmond and his business partner Manjit Dale, has seen recent attempts to consolidate in its core business frustrated.
Talks last year between the company and Swiss Re to merge their so-called closed-end businesses broke down.
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