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RNS Number : 8771P
Standard Life Aberdeen plc
23 February 2021
Standard Life Aberdeen plc
Simplification and extension of the strategic partnership
between Standard Life Aberdeen and Phoenix Group Holdings
Standard Life Aberdeen plc ("Standard Life Aberdeen") today
announces a simplification and extension of its strategic
partnership with Phoenix Group Holdings plc ("Phoenix Group").
The agreements announced today are mutually beneficial and
simplify the partnership focusing it on the provision of Standard
Life Aberdeen's high-quality asset management services to Phoenix
Group and its insurance and workplace pension customers. Standard
Life Aberdeen's purchase of the Wrap Self-Invested Personal Pension
("Wrap SIPP"), Wrap Onshore Bond and UK Trustee Investment Plan
("TIP") businesses from Phoenix Group will also support its growth
agenda for these businesses.
The partnership with Phoenix Group was expanded when Standard
Life Aberdeen sold its UK and European life insurance business to
Phoenix Group in 2018 (the "Insurance Sale"). While the Insurance
Sale allowed Standard Life Aberdeen to streamline its own
operations, it also created a complex network of commercial and
operational services between the groups, including in respect of
certain pensions and savings products and the shared use of the
"Standard Life" brand.
The two groups have now agreed to simplify these arrangements
and strengthen their relationship in the following way:
-- The strategic asset management partnership (under which
Standard Life Aberdeen currently manages cGBP147.4bn* of Phoenix
Group assets) will be extended and will now operate until at least
2031. The key changes relate to the price adjustment mechanism
agreed at the time of the Insurance Sale which protects Standard
Life Aberdeen in the event of certain types of asset
withdrawals.
-- Standard Life Aberdeen has a market-leading offering for its
UK financial adviser clients in the form of its Wrap and Elevate
platforms. To support its ambitious growth plans for these
businesses and the continuous improvement of its service to its UK
adviser clients, Standard Life Aberdeen will purchase the Wrap SIPP
and Wrap Onshore Bond businesses from Phoenix Group. The economic
risk and reward in these businesses will transfer to Standard Life
Aberdeen with effect from 1 January 2021 with the legal transfer to
follow by a Part VII transfer scheme targeted for completion in
late 2022. Wrap SIPP and onshore bond customers should see no
service impact arising from the transfer.
-- Standard Life Aberdeen will continue to partner with Phoenix
Group to design and provide investment solutions for Phoenix
customers. In addition, it will acquire the TIP business from
Phoenix Group to consolidate its investments offering for UK
pension scheme clients. Standard Life Aberdeen already provides
investment services for these clients.
-- Standard Life Aberdeen will sell the "Standard Life" brand to
Phoenix Group during the course of 2021. As a consequence, certain
colleagues who support this brand and related marketing will also
transfer to Phoenix Group. Standard Life Aberdeen will pay GBP32m
to Phoenix Group in return for Phoenix Group bearing the cost of
some transferring colleagues going forward. The sale of the
"Standard Life" brand and the transfer of related marketing
colleagues are not expected to impact materially on our results.
Standard Life Aberdeen has initiated a branding review, the outcome
of which it will announce later this year.
-- The upfront payment by Standard Life Aberdeen for the
purchase of the Wrap SIPP, onshore bond and TIP businesses will be
GBP62.5m, which will be offset in part by expected payments from
Phoenix Group to Standard Life Aberdeen relating to the profits of
the business prior to completion of the legal transfer. Standard
Life Aberdeen expects its Adviser vector to benefit from its
acquisition of these businesses (which represent existing AUMA of
cGBP36bn**).
-- All outstanding differences between the two groups in
relation to legacy matters have been settled as part of the
agreements being announced today. The resolution of these legacy
matters will not materially impact on Standard Life Aberdeen's 2020
financial performance and will result in Standard Life Aberdeen
receiving a net cash inflow of GBP34m in February 2021. This
represents an inflow of GBP54m relating to specific indemnities and
a GBP20m outflow relating to settlement of other legacy
matters.
-- Other existing services and platform arrangements between the
groups will gradually be terminated to simplify the strategic
partnership.
Standard Life Aberdeen's beneficial shareholding in Phoenix
Group remains c.14% and it retains the right to appoint a director
to the Phoenix Group board. Given the strength of the partnership
that is being created to focus on growth, Standard Life Aberdeen
continues to view its shareholding in Phoenix Group as
strategic.
Commenting on the transaction, Stephen Bird, CEO of Standard
Life Aberdeen, said:
"The most successful partnerships in business tend to be formed
on clear and simple terms. What we are announcing today is an
agreement that simplifies the relationships between Standard Life
Aberdeen and our strategic partner Phoenix Group in a way that will
allow us to work together constructively as partners for at least
the next ten years. Both businesses will be able to play to their
respective strengths in the partnership.
"The "Standard Life" brand has an important heritage. In the UK,
it has strong recognition as a life insurance and workplace
pensions brand. This is closely aligned with Phoenix's strategy and
customer base. This is much less the case with the business we are
building at Standard Life Aberdeen which is focused on global asset
management, our market-leading platforms offerings to UK financial
advisers and their customers, and our UK savings and wealth
businesses. That's why I am excited about the work we are doing on
our own brand, which we look forward to sharing later this
year".
Andy Briggs, CEO of Phoenix Group said :
"I'm delighted with today's announcement and the extension of
our strategic asset management partnership with Standard Life
Aberdeen until at least 2031. This recognises the global expertise
and excellent service that Aberdeen Standard Investments delivers
to Phoenix Group and our customers as our preferred asset
management partner. The simplification of the Standard Life brand,
sales and marketing will be a key enabler of Phoenix's growth
strategy, which in turn should lead to greater asset flows to
ASI."
23 February 2021
Enquiries:
Institutional Equity Investors
Catherine Nash +44 (0) 7798 518 657
Media
Andrea Ward +44 (0) 7876 178 696
Smithfield
Iain Dey +44 (0) 7976 295 906
Latika Shah +44 (0) 7950 671 948
LEI: OTMBS544NMO7GLCE7H90
Notes to Editors
About Standard Life Aberdeen
Standard Life Aberdeen plc is a global asset management company
with financial adviser platform and savings and wealth businesses
in the UK. We have offices in over 50 locations worldwide and
employ around 6,000 people.
Our expertise and resources enable us to offer a wide range of
investment solutions and services designed to meet our clients'
needs today, tomorrow and for the longer term. We manage and
administer GBP511.8 billion of assets worldwide*.
Wherever we are in the world we strive to make a positive
long-term impact. This means delivering world-class investment
solutions. It also means operating ethically, encouraging good
practices among companies we invest in, and providing support and
expertise for the benefit of the communities in which we
operate.
Standard Life Aberdeen plc is headquartered in Scotland. It has
over 1 million shareholders and is listed on the London Stock
Exchange.
Find out more about Standard Life Aberdeen .
* As at 30 June 2020
** As at 30 September 2020
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