Broker tips: Standard Life, Mercia Asset Management
By Iain Gilbert
Date: Thursday 23 Jul 2026
(Sharecast News) - Berenberg lifted its price target on insurer Standard Life to 1,072p from 975p, saying the upcoming Aegon UK acquisition would materially strengthen the group's scale and market position.
Berenberg said the £2bn deal would move Standard Life to first place in pensions and savings and second in workplace, while also shifting the mix of adjusted operating profits further toward capital‑light, fee‑based revenues. It added that the enlarged scale should also give Standard Life greater capacity to tackle recurring retail outflows that have been benefiting rivals such as St James's Place.
Ahead of the group's first half results on 7 September, Berenberg expects debt to have fallen to £2.9bn following a £500m reduction in the first half, bringing Standard Life's Solvency II leverage ratio down to 29%, ahead of the year‑end target of around 30%.
With that leverage goal effectively met, Berenberg said Standard Life can now redeploy the £500m previously earmarked annually for debt reduction into growth and capital returns, forecasting a £200m buyback starting after FY26 results.
Berenberg also pointed to potential further changes in Standard Life's business model, noting an Financial Times report that a consortium led by CVC and Prudential Financial was in talks to provide third‑party capital to support bulk purchase annuity growth - a move could inject around £1bn into a new unit and accelerate the shift toward capital‑light revenues.
The German bank, which has a 'buy' rating on the stock, said its higher target price reflects updated estimates incorporating the Aegon deal as well as a reduced cost of equity, lowered from 9.25% to 8.9%, arguing that Standard Life's position as the UK's largest long‑term retirement savings and income business justifies the change.
Mercia Asset Management has secured a new three‑year debt facility with Metro Bank worth up to £38m, a move Canaccord Genuity said gives the group greater flexibility to pursue inorganic growth.
The package includes a £13m term loan with a margin of 3.99% over SONIA and a £25m revolving credit facility opening at 3.50%, with the margin stepping down to 3.00% depending on leverage.
Canaccord said the additional firepower strengthens Mercia's ability to execute selective, earnings‑accretive M&A aligned with its Mercia FY27 strategy, aimed at lifting AUM above £3bn and doubling EBITDA to around £10m by FY27.
The Canadian bank noted Mercia's established track record of acquisitions that enhance scale and recurring fee income, and said the new facility helps bridge timing on deals while preserving balance‑sheet strength.
It assumes the term loan will be drawn within 60 days, with the revolving facility remaining undrawn initially, resulting in a modest 3% to 6% cut to FY27-28 fully diluted adjusted earnings per share due to negative carry. Even so, Canaccord argued the certainty of funding supports both organic expansion and selective M&A as fundraising pipelines convert.
Canaccord reiterated that Mercia entered FY27 with "pragmatic confidence" in building a scalable, predictable, fee‑driven business, supported by structural demand for UK regional private capital. The broker kept its 67p target price and 'buy' rating unchanged, implying 154% upside.
Reporting by Iain Gilbert at Sharecast.com
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