Earlier this year, the financial giant announced plans to sell its insurance division for £3bn, stating that it was a “major step” to allow the firm to focus on its asset management division.
In today’s update, the company said it would return £1bn through the issuing of new B shares to investors that could be redeemed for cash, and a further £750m in the form of a share buyback scheme.
It said the remainder of the proceeds generated by the sale would be used to pay down some of the company’s existing debt of £1.9bn, starting with tier one bonds.
However, investors were unimpressed with SLA’s share price falling 1.6% in early trading.
Chairman of Standard Life Aberdeen Gerry Grimstone said the return to shareholders represents over 15% of their overall market cap.
He said: “The last year has been a period of significant change for Standard Life Aberdeen with the proposed sale of the UK and European insurance businesses completing our transformation to a capital light investment company.
“We are continuing to focus on harnessing the breadth and depth in our investment capabilities to deliver cost effective solutions to meet the needs of our clients and customers across multiple channels and geographies.
“The cash generated from the sale will enable us to continue to invest in the development of our business and also to return surplus capital to shareholders.”
Standard Life Aberdeen said a circular will be sent tomorrow (30 May) with a general meeting to approve the proposed insurance business and subsequent capital return on 25 June 2018.
