Phoenix CEO Says More Deals to Come After Buying Axa Assetsby
Phoenix funds deal with share placing and short-term loan
Insurer’s shares climb most in two months in London trading
Phoenix Group Holdings has completed its first deal since Chief Executive Officer Clive Bannister was drafted in five years ago to turn around the insurer, buying assets from France’s Axa SA.
The company is purchasing Axa’s U.K. pensions and SunLife protection businesses for 375 million pounds ($549.6 million), funded through a 22.5 million-share placement and a short-term loan, according to a statement Friday. The deal boosts assets under management by 12.3 billion pounds and adds 910,000 policies. The shares rallied in London trading.
“Somebody said to me that the clock is ticking, when are we going to see a transaction,” Bannister said in a telephone interview. “That is now behind us, we have done our first transaction and look forward to more coming.”
Bannister was hired in 2011 to cut costs and reduce 2.7 billion pounds of debt after Phoenix bought Resolution Plc for 5 billion pounds in 2007. The CEO has since sold Ignis Asset Management to Standard Life Plc, tapped capital markets and gained an investment grade rating from Fitch Ratings.
The Axa deal is expected to generate about 500 million pounds of cash flows by 2021 and boost the final dividend 5 percent to 28 pence per share this year, Phoenix said. The shares climbed the most in two months, rising 3.2 percent to 877 pence at 10:30 a.m. in London.
The deal follows the sale of its offshore investment-bonds unit in April and its Elevate division announced May 4. The sales will generate a loss of 400 million euros ($447 million), the insurer said in a separate statement.
“We think there will be considerable further consolidation in the U.K. life industry and we expect to be at the forefront,” said Bannister. Today’s deal “is a stepping stone.”
Phoenix was said to be among firms considering making a bid for Deutsche Bank AG’s Abbey Life Assurance Co., people with knowledge of the plans said in April. The CEO declined to comment Friday.