Phoenix Group is issuing £950m of new shares to pay for its acquisition of Standard Life Aberdeen's insurance business.
As part of the deal Phoenix has agreed to pay a total cash consideration of £1.9bn upon completion of the deal. The money raised in the rights issue announced this morning (30 May) will go towards this and several associated transaction costs.
The company will issue 183m new shares, representing nearly 47 per cent of the existing issued share capital of Phoenix.
Phoenix said the new shares will be admitted to the London Stock Exchange on the morning of Tuesday 26 June.
The closed-book provider - which buys up the rights to receive income from legacy products that other insurance providers no longer want to service - added that due to the size of the deal, it is technically a reverse takeover which means it is conditional on approval by Phoenix's shareholders at a meeting on Monday 25 June.
In a statement, Phoenix said: "The board of directors of Phoenix unanimously considers that the acquisition and the resolutions are in the best interests of the company and its shareholders and recommends that shareholders vote in favour of the resolutions as the members of the board have irrevocably undertaken to do in respect of their own shares in the company."
Standard Life Aberdeen - which was formed last year through the merger of insurer Standard Life and asset manager Aberdeen - announced the sale of its insurance arm in a £3.2bn deal in February.
The company will keep hold of its three adviser platforms - Wrap, Elevate and Parmenion - and 1825, its financial advice business.
The sale came after Standard Life Aberdeen's biggest client Scottish Widows withdrew £109bn of assets from the company.
At the time Scottish Widows chief executive Antonio Lorenzo said the merger of Standard Life and Aberdeen has resulted in his company's assets being managed by a "material competitor".
damian.fantato@ft.com
