Standard Life Investments agreed to acquire Ignis Asset Management from Phoenix Group Holdings in a £390 million ($645.3 million) deal that will “deepen investment capabilities, broaden the client base and strengthen (the firm's) strategic positioning,” according to Keith Skeoch, CEO of SLI.
In a conference call Wednesday, Mr. Skeoch said the acquisition increases the money manager's third-party assets under management to 64% of the firm's total AUM, and 81% of revenues. SLI currently manages 53%, or £97.4 billion, of its total £184.1 billion of assets under management on behalf of third parties. The acquisition adds £59 billion in AUM.
The transaction, which is subject to approval from the U.K.'s Financial Conduct Authority but is expected to be completed on or before June 30, enhances SLI's active management and government bonds and liquidity capabilities, in particular, this according to Mr. Skeoch.
“There is a rapidly growing liability-aware market being generated globally by the increasing tendency of insurance companies around the world to outsource investment management, and also a need of maturing defined benefit pension schemes to derisk their portfolios,” Mr. Skeoch said on the conference call.
“The combination of Standard Life Investments and Ignis will help to reinforce the strong foundations we already have in place … to meet client demand.” SLI also becomes a strategic partner to Phoenix, providing money management services to Phoenix's life insurance company subsidiaries.
Mr. Skeoch said the integration of platforms and the businesses will lead to “material cost savings,” and SLI has identified £50 million of savings by the third full year of ownership.
“Job losses will form a part of that, but we will be doing all we can to mitigate the impact on individuals,” Mr. Skeoch said.
Matthew Preston, analyst at Berenberg Bank, wrote in a note Wednesday that the deal “has merit for both parties, adding scale to Standard Life Investments, while facilitating Phoenix's debt reduction plans. The addition … is expected to result in a 32% uplift to AUM taking it to £243 billion, driving scale benefits.”