LONDON (ShareCast) - Closed life funds consolidator Phoenix Group has sold its Ignis Asset Management division to Standard Life as part of its planned reduction in gearing levels and diversification of its financing structure.

The £390m cash deal came just two days after the companies confirmed media speculation that they were in discussions.

Phoenix said that the proceeds from the Ignis deal, receivable on completion, will be used to repay £250m of its Impala debt facility and will lower its gearing ratio to 39%, compared with 44% at the end of 2013.

The company's 40% gearing target will be reached two years earlier than expected, it said.

Gearing, defined as gross shareholder debt as a percentage of the gross market consistent embedded value (MCEV), will fall as the MCEV increases by £237m to £2,615m.

Phoenix also signed a long-term strategic asset management alliance with Standard Life Investments, and agreed to share value resulting from any further Phoenix assets becoming managed by the new Ignis owner.

"This is a transaction which provides Phoenix with significant strategic and financial benefits. The divestment of Ignis is compelling across all our key metrics," said Phoenix's Chief Executive Clive Bannister.

"Following this transaction, Phoenix will be solely focused on the management of closed life funds. We believe that we will be well placed to benefit from future acquisitions through the consolidation of closed life funds and our long term strategic alliance with Standard Life Investments."

Phoenix also said on Wednesday that it left its 2013 full-year dividend payout unchanged after operating profits rose 2% and assets under management were stable.

BC

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