LONDON (ShareCast) - Oriel Securities has kept an 'add' rating on Phoenix Group, hailing the closed life funds consolidator's deal to sell its Ignis Asset Management division to Standard Life.

The £390m cash deal forms part of Phoenix's planned reduction in gearing levels and diversification of its financing structure, the company said on Wednesday.

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, which "will accelerate the lifting of the dividend caps and enable Phoenix to pay higher dividends if it chooses to do so", according to Oriel analysts Marcus Barnard and Hari Sivakumaran.

Phoenix also announced its 2013 results on Wednesday which showed that operating profits rose 2% to £439m, well ahead of the consensus forecast of £315m, according to Oriel.

Operating companies cash generation increased 18% to £817m, also coming in above analysts' £750m estimate.

Oriel said: "We retain our 'add' recommendation and price target of 750p. The shares have yield support and continue to trade at a discount to enterprise value per share."

The stock was 3.7% higher at 736.5p by 10:55.

BC

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