Standard Life Boss warns that company will relocate to England if Scots vote Yes: One of Scotland’s most successful businesses is preparing to relocate to England if Scots vote for independence, its Chief Executive has revealed
Standard Life has agreed to sell its Canadian business for almost twice its book value and return £1.75 billion to investors. Questor agrees with analysts that this looks like a “fabulous deal” for shareholders.
The business that has been sold to Manulife for a total cash consideration of £2.2 billion is currently held on Standard Life’s books at about £1 billion. Selling the company at around twice its book value has crystalised a gain for shareholders of £1.2 billion.
Standard Life will retain £450 million of the sale proceeds to invest in the expanding asset management business. The company has been building on its investment management capability during the past 18 months.
The deal to buy Ignis Asset Management for £390 million was completed in July of this year and the £83 million deal for Newton’s private client business was completed in September of last year. David Nish, Chief Executive of Standard Life, believes that the business post the sale of the Canadian operations will be stable and faster growing. Standard Life generates the majority, almost 90%, of its revenues from charging fees for the administration and investment of its clients £156 billion in funds. Mr Nish said that managing those assets provides predictable revenue which was growing at an average of 9% a year, once the Canadian business is excluded. He added that the Canadian revenue was more volatile and slower growing. The effect of this has been for analysts to increase their valuation of the Standard Life group that remains after the deal. The shares are trading on 17 times earnings, but that falls to 15 times next year and 13 times the year after. The prospective dividend yield is also a healthy 4.4%, and the dividend is forecast to rise by 6% this year and next. Questor doesn’t expect the shares to run away from here as most of the gains are now priced in. However that steady and growing dividend income is attractive. Standard Life at 417.2p+31.1p Questor Says ‘Hold’.
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