Shares in Standard Life soared by as much as 10 per cent yesterday after the market had its first opportunity to react to Wednesday night’s £2.2 billion sale of the life and pension giant’s Canadian arm.
The surprise disposal, to Toronto-based Manulife, will trigger a £1.75bn windfall for shareholders, who will be asked to rubber-stamp the transaction at a general meeting to be held in London on 3 October.
Investors can choose to take the payout as a capital gain via bonus shares, which Standard Life will buy back for cash, or as income through a special one-off dividend. The average payout for those who held their shares after the firm floated eight years ago will be about £491.
As part of the deal, targeted for completion early next year, Manulife will market Standard Life Investments (SLI) funds to investors in Asia, Canada and the US. The Edinburgh firm’s assets under management distributed by Manulife – which also owns US insurer John Hancock – stood at £3.3bn in the first half and SLI chief executive Keith Skeoch said that figure could more than double within three years.
Manulife boss Donald Guloien said Standard Life had started to explore the sale of the business “several months ago”, but the deal caught the City by surprise.
Shore Capital analyst Eamonn Flanagan “applauded” the return of capital and Standard Life shares ended the session up 31.1p or 8.1 per cent at 417.2p.
Flanagan added: “The results from the Canadian operation have been volatile over the past few years and form a major element of the group’s exposure to spread and guarantees, both of which we feel that the company has not been entirely comfortable with.”
Operating profits at the Canadian business, which has about 2,150 staff and manages £30.1bn in assets, rose 17 per cent to £69m in the first half.
Standard Life chief David Nish said: “We have transformed our Canadian operations into a business which has consistently delivered strong results, contributing to the overall success of the group. As a result, it is now a much more attractive proposition and the sale allows us to realise fully the value of the business for our shareholders.”