LONDON (Alliance News) - Legal & General Group PLC on Friday said it will sell Suffolk Life, a UK provider and administrator of self-invested personal pensions, to AIM-listed Curtis Banks Group PLC for GBP45.0 million, as part of a strategy of selling non-core assets to improve returns.
The deal is subject to regulatory approval, which is expected in the first half of 2016. The other condition of the deal was a GBP27.0 million share placing by Curtis Banks, which later confirmed that bookrunner Peel Hunt LLP has since completed the placing with investors. The 8.4 million shares were placed at 320 pence each, with the proceeds to be used in conjunction with new borrowings to provide the money needed to make the acquisition.
Shares in Curtis Banks were up 0.7% at 360.00p on Friday morning, while shares in Legal & General were down 1.0% at 242.80 pence.
Curtis Banks also has arranged a GBP15 million debt facility with Santander, repayable over five years in equal quarterly instalments, together with an GBP8.0 million continuous revolving credit facility. The facilities have a coupon rate of 2.25% over the London interbank offered rate benchmark and replace an existing GBP3.0 million outstanding term loan.
Curtis Banks said Friday it is trading in line with its expectations and plans on paying an interim dividend of no less than 3 pence per share. It already boasts a portfolio of about 39,000 SIPPs. Ipswich, England-based Suffolk Life administers about 26,500 plans, including 3,600 commercial properties, and had GBP8.7 billion in assets under administration at the end of November 2015.
"Legal & General is delighted to have played a part in the success of Suffolk Life. It is a great business, but it is not core to our focused strategy going forward. Teaming up with Curtis Banks will help it to realise its strong potential, by creating one of the UK's largest SIPP providers," Mark Gregory, the FTSE 100 life and investments group's chief finance officer, said.
The deal will make Curtis Banks the second largest independent full SIPP provider in the UK, according to Executive Chairman Chris Banks, creating a combined business with a total of GBP18 billion in pro-forma assets under administration and more than 65,000 SIPPs. The deal is expected to boost earnings at Curtis Banks in 2016, excluding costs related to the acquisition and placing.
"Suffolk Life is one of the oldest and most respected brands in the SIPP industry, with an excellent reputation for service and professionalism. We are delighted that Legal & General has chosen us to take ownership of this business and believe this reflects our strong standing and market reputation," Banks said.
Suffolk Life made a GBP1.3 million pretax profit in 2014, based on total income of GBP18.5 million and expenditure of GBP14.5 million.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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