Phoenix (PHNX) shareholders are in line for an income boost. Its £2.9bn purchase of Standard Life Aberdeen’s (SLA) assurance business will result in an annual £338m increase in dividend payments from 2019. The purchase will be funded via a fully underwritten £950m rights issue, £1.02bn from its debt facilities and the remaining £250m via its cash resources.
The deal is expected to generate an additional £5.5bn in cash flows, £1bn of which will come through between 2018 and 2022. It should also bring with it £720m of net synergies, including £50m of annual pre-tax cost savings. The assurance business – which will not include its wealth management business or the Wrap, Elevate or Parmenion retail adviser platforms – will add £166bn in assets and 4.4m policyholders across the UK, Germany and Ireland. That will take Phoenix’s total assets under management to £240bn, with the potential to expand further across Europe. Given its enhanced scale, there could also be scope for the group to enter the FTSE 100.
