Yahoo Finance Phoenix unveils £950m rights issue to fund Standard Life Aberdeen deal
Life insurer Phoenix Group has unveiled a £950m rights issue so that it can snap up the majority of Standard Life Aberdeen's insurance business.
Phoenix, which specialises in closed books of business otherwise known as zombie funds, told investors that the money raised would fund the landmark purchase.
In a circular sent to investors on Wednesday, the rights issue was listed as one of three things needed in order for the £3.2bn deal to go ahead, along with shareholder and regulatory approvals.
Standard Life Aberdeen (SLA) chairman Sir Gerry Grimstone said that after the deal completed the company could focus on retail customers "at a time when individuals are becoming increasingly responsible for their own saving needs" and demand for advice grows.
He added that the group remained interested in potential deals, or "organic and inorganic growth", which might address strategic gaps. SLA investors are also in for a windfall of up to £1.75bn as a result of the deal.
The 134-page circular outlined an extra £100m of savings expected by the end of 2020 if the takeover takes place, on top of the £250m savings already flagged.
It also pointed to a £7bn mandate under review, which could transfer from Phoenix to Standard Life Aberdeen, with the "potential for additional mandates to follow".
Sir Gerry said earlier this week that 2017 had been a "truly momentous year" for the Scottish asset manager, created last summer following the £11bn tie-up of Standard Life and Aberdeen Asset Management. A meeting to approve the Phoenix deal is set for June 25.
Shares in both companies inched up on Wednesday.
