Standard Life Plans to Return $2.3 Billion to Shareholders

(Bloomberg) -- Standard Life Aberdeen Plc will return as much as 1.75 billion pounds ($2.3 billion) to shareholders after it completes the sale of its insurance unit to Phoenix Group Holdings.

The asset manager will issue 1 billion pounds of new B shares and buy back about 750 million pounds of stock using capital freed up from the sale of the insurer. The balance of the money from the deal will be used to retire bonds and support investment, the firm said in a statement ahead of its annual general meeting on Tuesday.

"It’s slightly more than expected," said David McCann, an analyst at Numis Securities, who had estimated 1.54 billion in return to shareholders. Standard Life-Aberdeen fell as much as 1.5 percent in London trading and was down 1.4 percent at at 354 pence as of 8:42 a.m.

Standard Life had hoped that the sale of the insurance unit would improve its chances of keeping a mandate to manage 109 billion pounds that it invests for Lloyds Banking Group Plc, its biggest client. The bank is holding a contest among fund managers interested in overseeing the money after it decided to pull the capital following the merger of Aberdeen and Standard Life, which it says made the combined firm a competitor. The asset manager is challenging Lloyds decision to allocate the capital elsewhere.

The cash return can be taken as a sign that the company doesn’t have any large acquisition plans co-CEO Martin Gilbert said on Bloomberg TV on Tuesday.

Standard Life hasn’t given up on keeping the Lloyds money, and dialog with the bank remains constructive, co-CEO Martin Gilbert said on Bloomberg TV on Tuesday. The cash return can be taken as a sign that he company isn’t considering large-scale acquisitions as it continues to work on integrating the two main parts of the company, he said.

The Edinburgh-based company will receive 2.3 billion pounds ($3.1 billion) in cash from the insurance unit sale as well as a stake of almost 20 percent in Phoenix. The sale will complete Standard Life’s transformation into a capital-light investment company,” Chairman Gerry Grimstone said in the statement.

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