Standard Life Aberdeen plans £1.7bn cash return

The FTSE 100 group has proposed the sale of its UK and European insurance business to Phoenix Group, which is awaiting regulatory approval.

Surplus cash arising if the sale is completed has been proposed for return to shareholders via a £1bn B-share scheme soon after completion, which is expected before the end of September, and £750m share buyback over coming months, which combined represent more than 15% of our market capitalisation at close of business at the end of last week.

The B-share scheme would see new B shares issued to shareholders which SLA will subsequently redeem for cash, This will be accompanied by a share consolidation in order to ensure the market price of each Standard Life Aberdeen ordinary share before and after the implementation of the scheme.

The balance of proceeds from the proposed transaction, combined with existing liquidity within the SLA Group, will be used to retire some of the group's £1.9bn debt and support investment and other general corporate purposes. Directors intended to retire some outstanding tier-1 bonds and are still evaluating options around outstanding tier 2 bonds "with a focus on maximising the efficiency of its capital and liquidity".

Ahead of the company's annual shareholder meeting, Chairman Sir Gerry Grimstone said the proposed sale would complete a transformative year that saw the merger of the two groups and emergence as a "capital-light investment company".

He added: "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."