After Phoenix Group Holdings purchased AXA assets in the UK, CEO Clive Bannister said that the group is looking forward to engaging in further transactions.
The deal for AXA’s UK pensions and SunLife protection businesses was valued at £375 million, funded through a 22.5 million-share placement and a short-term loan. The deal boosted Phoenix’s assets under management by £12.3 billion and added 910,000 policies. The group’s shares also rallied in London trading, rising by 3.2 per cent.
“Somebody said to me that the clock is ticking, when are we going to see a transaction,” Bannister said. “That is now behind us, we have done our first transaction and look forward to more coming.”
Phoenix is said to be one of the firms vying to acquire Deutsche Bank AG’s Abbey Life Assurance.
Bannister joined Phoenix in 2011 with the intention of cutting costs and reducing the company’s £2.7 billion debt after acquiring Resolution Plc for £5 billion in 2007. Since then, Phoenix has sold Ignis Asset Management to Standard Life, tapped capital markets, and achieved an investment grade rating from Fitch Ratings.
The AXA acquisition is expected to generate about £500 million of cash flows by 2021 and to boost its final dividend by five per cent to 28 pence per share for 2016.
“We think there will be considerable further consolidation in the UK life industry and we expect to be at the forefront,” said Bannister. The latest deal was described as “a stepping stone.”
AXA continues UK sell-off
Major insurer is frontrunner for SunLife buyout