The sale of Scottish Widows Investment Partnership (Swip) looks to be moving a step closer and probably into the hands of the Australian financial services group Macqaurie.
There has been a lot of talk over the years over the future of Widows, but usually concerning the life and pensions group. It now seems certain that the fund management business will be offloaded as “non-core” and a deal looks likely to be signed before Christmas.
What has changed is the reason behind a proposed sale. Widows was seen as an expensive deal when Lloyds bought it in 1999 for £7 billion and for some time there were questions about whether the bancassurance model could be made to work.
Current thinking is that it is working and that Widows pays a handsome dividend into its parent group each year, making it a key business.
Today’s Lloyds management is not working entirely on its own judgment but on the wishes of the Treasury, which wants to see it return to its roots as a retail bank and to help fill a gaping hole in its balance sheet. Swip will be forfeited to help meet that end.
The price likely to be paid – in the region of £500 million – is still regarded as too high by those said to be in the frame. But compared to the original deal it may endorse those earlier commentators who said Lloyds overpaid for the whole business in the first place. Mind you, Lloyds was an entirely different business at the time. On the day it announced the Widows acquisition its shares rose to 935p.
Scotland taking the lead in technology
Skyscanner and Iomart. Two companies that have been making headlines this week and proving that Scotland is punching above its weight in the technology sector.
Iomart, the cloud computing firm, was first out the blocks with a £23 million acquisition of Backup Technology that was its biggest takeover to date.
As we report today, Skyscanner, the flight comparison search engine, has welcomed the Silicon Valley venture capital firm Sequoia Capital as a shareholder. As only the third investment it has made in Europe, this is a huge vote of confidence in the Edinburgh company.
No numbers were given for the Skyscanner deal, but it is thought Sequoia has paid between £50m and £100m to acquire shares from existing shareholders to give it a 10-20 per cent stake.
For Scottish Equity Partners, which invested £2.5m in the business six years ago, this deal will value its stake at about 80 times that figure.
Both Skyscanner and Iomart have signalled with these deals that they are making a step-change in their expansion plans, rolling out their international footprint and giving Scotland a leading edge. With recovery in sight, these are two names to watch. Doubtless they will also be on the radar for some of the world’s big players looking for acquisitions of their own.
Welby wins in battle over payday lenders
It was the Archbishop of Canterbury who kicked off concern over payday lenders and it seems divine intervention has got a result.
Despite scoring an own goal when it turned out the Church of England had invested in a fund backing Wonga.com, Justin Welby must feel he was right to go on the attack now that the regulator has demanded tougher rules.
In this battle it’s God 1 Mammon 0.