Deal add 160,000 customers
Standard Life acquires Elevate adviser platform
The deal adds 160,000 customers and £9.8 billion of assets under administration and will be funded from existing cash resources.
Standard Life did not disclose the value of the acquisition as it is not considered material, but Axa today said it expected the sale of all three of its UK life and savings businesses – which includes Sun Life and Axa Wealth – will raise £650 million.
Analysts at Macquarie estimate Standard Life paid less than £50m and will invest less than £50m to merge the IT systems.
They note that the Axa platform has been loss making and estimates that since 2008, it has accrued losses of more than £110m.
“Standard Life will, we expect, reduce costs significantly by migrating to its own system.
“It is an interesting deal, especially if Standard Life can attract some of the assets away from the fund solution Architas, which is remaining with Axa. Architas has been added to the SL platform but we believe MyFolio (Standard Life) has better past performance and we expect Standard Life to be a significant net gainer here.
“Architas has £19.8bn in funds, a proportion of which will be from Elevate where the super clean low price was available however we do not know how much of the £9.8bn is in Architas.
”We like Standard Life due to the growth potential of the business and excess capital. We believe this is a sensible use of that capital.”
Standard Life said the acquisition “will build on its ‘strong organic growth in the UK pensions and savings market.”
The transaction, which has been subject to speculation for several weeks, is expected to create one of Britain’s biggest adviser platform businesses.
It will have combined assets under administration of £36.4 billion, 350,000 customers, and net asset inflows of £5.7 billion in 2015.
Axa last week announced the disposal of its UK offshore investment bonds business and today confirmed that it is engaged in discussions for the disposal of its remaining UK Life & Savings assets, its direct protection business SunLife and its traditional (non-platform) investment and pension business.
It said there is no certainty these discussions will result in a sale, but Phoenix is believed to be interested in Sun Life.
AXA UK will be retaining its Property & Casualty, Health and Asset Management operations.
Barry O’Dwyer, managing director, corporate, retail and wholesale at Standard Life, said: “I am excited about the opportunity to bring together two award winning adviser platforms at a time when the need for high quality advice has never been greater.
“We have a track record of successful acquisitions and an integration approach focused on building a sustainable commercial model for the Elevate platform.
“Today’s announcement demonstrates further progress towards building a simplified and well diversified investment company by strengthening Standard Life’s leading position in one of our key growth channels.”
David Tiller, head of adviser and wealth manager propositions at the company, added: “This acquisition is a clear sign of our continued commitment to lead the UK adviser platform market. It demonstrates to advisers that, as the market consolidates, supporting their businesses and meeting the evolving needs of their clients is central to the long-term strategy of Standard Life.
“Identifying the right business is the key to success when bringing two propositions together – Elevate was an obvious choice for us. This acquisition combines two leading adviser platforms and will bring clear benefits to existing Standard Life Wrap and Elevate advisers alike.”