Legal & General has agreed to sell Suffolk Life to Curtis Banks in a deal worth £45m.
A stock exchange announcement explained the acquisition is to be funded by the combination of an underwritten placing of 8,437,500 new ordinary shares of 0.5p each in Curtis Banks at a placing price of 320 pence per placing share, to raise £27m, along with a new debt and revolving credit facility.
Peel Hunt is the sole bookrunner and nomad on the placing, while the deal is still subject to regulatory approval by the Financial Conduct Authority and the Prudential Regulation Authority.
Curtis Banks’ board stated Suffolk Life is highly complementary to its existing business, adding “the rationale for the acquisition is compelling and consistent with the company’s stated strategy of growing organically and through carefully selected acquisitions”.
The enlarged group will have pro-forma assets under administration of about £18bn and more than 65,000 self-invested personal pensions under administration.
The deal is expected to be earnings enhancing in the financial year, while the board also noted Suffolk Life’s “high quality management team” will remain following completion.
Chris Banks, executive chairman of Curtis Banks, stated the transaction will make his firm the second largest independent full Sipp provider in the UK.
He said: “We believe that Suffolk Life has a strong heritage, culture and client focus, which we share at Curtis Banks.
“We will retain Suffolk Life’s headquarters in Ipswich and believe there will be continuity for clients and exciting opportunities for Suffolk Life’s management and employees as part of the enlarged group.”
Mark Gregory, L&G’s group chief finance officer, said while Suffolk Life is a great business, “it is not core to our focused strategy going forward”.
A statement from L&G added it is disposing non-core businesses and focusing on core activities where we believe we can achieve significant scale and attractive returns on capital.
This is just the latest division that L&G has sold off in the past few years, with its offshore bond operation to Canada Life’s parent company Great-West Lifeco in February 2015.
Earlier this month it completed talks with Apicil to sell its French business, while it disposed of Legal & General Ireland and Egypt in 2015.
There have also been rumours that L&G would sell Cofunds, but this has not been confirmed.
Martin Tilley, director of technical services at Dentons Pension Management, said the deal does not surprise him and he anticipates further announcements of this type in the run up to September, when Sipp capital requirements really start to bite.
He said: “We are in a period of uncertainty that is impacting values pending the Treasury’s statement on the future of pensions in the spring Budget in March; this makes valuations of books of business speculative and less precise at the moment.
“What is clear though is that it isn’t just the smaller providers being swallowed up, we are now seeing consolidation amongst previous consolidators.”
He added concerns the market is diminishing and moving towards one with just a few ‘supersize’ Sipp operators, which might work for the simple cost driven end, “but where true bespoke Sipps and personal service is required, that is not always conducive with the larger firms”.
