Phoenix Group Holdings gained the most in about eight months in London trading after Standard Life Plc said it’s in advanced talks to buy Ignis Asset Management.
The companies are in exclusive talks over Ignis, Phoenix’s investment unit that manages about 67.6 billion pounds ($111 billion) in assets, according to separate statements from the firms today. A potential price wasn’t disclosed.
“From Phoenix’s perspective, such a deal would enable it to unlock the value tied up in Ignis,” Ashik Musaddi, an analyst at JPMorgan Chase & Co., wrote in a note to clients. He values the unit at 430 million pounds. “Standard Life has a strong cash position, which should mean that the entire deal could be funded via excess liquidity within the group.”
A deal would mark the second acquisition by a Scottish firm of an U.K. asset manager in four months. Aberdeen Asset Management Plc agreed to buy Lloyds Banking Group Plc’s Scottish Widows Investment Partnership unit for 560 million pounds in November.
Phoenix, the U.K.’s biggest manager of life insurance funds that are closed to new customers, rose as much as 5.8 percent, the biggest intraday gain since July. It was up 2.3 percent to 703.5 pence at 11:23 a.m. in London trading. Standard Life, Scotland’s largest insurer, rose 0.1 percent to 366.4 pence.
Analysts at Exane BNP Paribas said Standard Life may pay as much as 300 million pounds, saying the deal may have been why the Edinburgh-based insurer refrained from paying a special dividend when it reported full-year earnings last month.
The bank also cited Ignis’s 2.9 billion-euro ($4 billion) Absolute Return Fund as an attraction, which has grown from 615 million euros at the start of 2013 and returned 7.6 percent in 12 months. Standard Life Investment’s multi-asset Global Absolute Return Strategies fund has assets of 20.2 billion pounds.
“This transaction will further highlight the underestimated growth in Standard Life Investments earnings,” wrote Exane BNP analyst Andy Hughes in a note to clients.
Insurance companies tumbled in London trading last week after the U.K. government announced plans to scrap rules that forced retirees to buy annuities with their pension funds.
Phoenix said it will update the market when it reports full-year results on March 26. The deal was first reported by the Sunday Times, which said Royal Bank of Canada and Macquarie Bank Ltd. may also be interested.