Phoenix Share Discussion Threads

[edmundshaw] 25/2/2018 14:49

The 3% uplift in the dividend seems to me a bit conservative. And the cash and debt raise seems several hundred million in excess of what is required.

Given Phoenix also says that in the event of a no-go they plan to utilise the cash for other acquisitions, I suspect the added firepower has already a target or two in the cross-hairs. I should not be surprised to see another acquisition or two in the next twelve months!

Edit: to be clear, I am rather expecting another acquisition NOT including the annuity book where Phoenix is currently already in exclusive discussions for an external pension buy-in transaction.

[jonwig] 25/2/2018 14:41

It's win-win, I think....

PHNX gets improved dividend and cashflow potential, and once integrated there will be a lot of capital release. SLA gets to manage the assets of PHNX and 20% of the enlarged PHNX.

As already pointed out, if you take up your rights in full, you'll have the same stake in the enlarged company. If you want to sell some or all of your rights in nil-paid form, you won't lose money.

A long time ago I did a spreadsheet on a company comparing the actual nil-paid price with the theoretical. It was a waste of time, but might be worth following on day one.

@ pj fozzie - an alternative is to sell some nil-paid to afford to pay for the rest. That's what I'll have to do to since I'm going to change ISA provider.

[pj fozzie] 25/2/2018 13:58

I'm just pleased that it's looking like the timing will be in the new tax year - I don't have enough left in my allowance for my SIPP or my ISA to cover it before the 6th April.

Altogether (as a shareholder of both PHNX and SLA) I'm very happy with how this is panning out. Seems to be better for PHNX than SLA - but since I have over three times as much in PHNX, that's fine by me.

Agree that the split is of no importance - it's all gonna cost the same.

Cheers,
PJ

[edmundshaw] 25/2/2018 13:52

Really, the split is of no importance. They are raising cash and you get to keep your proportion of the company (after the 20% issue to Aberdeen) if you take up your rights, you get diluted by the same amount if you do not (but with more assets per share). 1 for 1, 1 for 3, 13 for 29, it makes no difference as the issue price will adjust accordingly.

[garycook] 25/2/2018 12:24

jonwig,A 1 for 1 sounds fantastic to double your Share holding in PHNX.I cannot see that happening to good to be true surely ! Yes Ianood 1 for 3.

[jonwig] 25/2/2018 10:39

topvest - they want to raise £950m and have 393.23m shares in issue. That means 242p/sh. It couldn't be any other number.

Whether there's dilution, I doubt it, as cashflows and dividends will increase. And NAV/sh isn't particularly important for life assurance.

[topvest] 25/2/2018 10:31

242p is very dilutive indeed for NAV per share. Would hope its at a better price than that.

[edmundshaw] 25/2/2018 09:59

More likely something like a 5 for 17 if the big banks get involved. They seem to love stupid numbers that make it harder to see what is actually going on...

[ianood] 25/2/2018 09:44

GARY - I think you mean 1 for 3?

[jonwig] 25/2/2018 06:28

GARY - I was thinking that 1-for-1 at 242p sounds reasonable. Rights issues tend to be at a discounted price to attract take-up and maybe pay the underwriters less.

[By the way, the figure might not be 242p as they might want to load costs onto it.]

[garycook] 25/2/2018 03:03

jonwig,PHNX require around 2.42p per share from shareholders for the £950 Million.So a 3 for 1, then my Maths work out a Rights price to be around 725p ?

[edmundshaw] 24/2/2018 19:57

That is three good transactions since I invested in 2015, all of them enhancing the shareholder position in terms of security, dividend and underlying company strength. This one is particularly agreeable, including some longer term cash generation and supporting the dividend for many years to come.

To date the share price gains from a very active management are giving us higher returns than the chunky dividend; long may that continue!!

[jonwig] 24/2/2018 12:27

@ schofip - yes, they dumped a lot. But the talks between SLA and PHNX were a well-kept secret. Surprisingly well, as they will have been going on for several weeks and involved a lot of people.

[jonwig] 24/2/2018 07:22

Looking at the timetable, they say a circular will be published in mid-April. This should contain the terms of the rights issue, and in my experience the shares will go ex-rights on that date.

The meeting will be in early-May, with the rights being full-paid by mid-May. The timetable suits the new ISA year, coincidentally.

Whatever the terms, they'll want about 242p per existing share from us.

The webcast is rather long and technical - I skipped a lot of it. But the introduction is well worth watching.

[lauders] 24/2/2018 00:39

Good news from PHNX. One of my better decisions was switching from BDEV to PHNX for income in June 2017. Also wish to "never sell" RCT!

[zcaprd7] 23/2/2018 17:22

Yes, wish I'd held...

[jonwig] 23/2/2018 12:43

BE = Bryce Elder. (Idiot? No.)

[hvs] 23/2/2018 12:39

FTSE 100 contender for sure

Who is this IDIOT BE ?????

[stemis] 23/2/2018 12:38

A £338m annual dividend at the current dividend yield of 6.5%, is a £5.2bn market cap

Which implies a current share price of about 818p

The question will be whether the deal will allow the stock to be re-rated, with the yield moving closer to its UK life peers yields of Legal’s (6.2% FY18 yield) and Aviva (5.8% yield).

Which would be a share price of 869 - 945p

[jonwig] 23/2/2018 11:53

FT Alphaville:

BE Phoenix has found something to buy, as it needs to otherwise it dies.
11:18 am

BE And Aberdeen has dumped the insurance business it tried to dump previously into a Scottish Widows JV.
11:19 am

BE Probably most interesting to look at from the Phoenix side initially. Deal is £2.9bn, which is pretty much Phoenix's market cap.
11:20 am

BE Or £3.2bn depending on how you price all the moving parts, which include £1bn of vendor finance.
11:21 am

BE and SLA getting a 20% shareholding in Phoenix.
11:21 am

BE Brokers happy-ish. Here's Numis.
11:22 am

BE This appears to be a very good deal for Phoenix, adding significant future cashflows, and priced at just 84% of Standard Life Assurance’s estimated Solvency II Own Funds of £3.5 billion, in line with recent transactions.
11:22 am

BE And Barclays. Who go though the hard numbers.
11:23 am

BE Phoenix estimates that its annual dividend capacity will increase to £338m from current £197m. A £338m annual dividend at the current dividend yield of 6.5%, is a £5.2bn market cap – an equivalent market cap to FTSE 100 insurance Admiral (£5.4bn) and Direct Line (£5.3bn). Phoenix estimates that the dividend, pro –forma for the equity raise and Standard Life Aberdeen’s 19/9% stake, is equivalent to a 3% increase. However, the flow of new business from Standard Life Aberdeen, coupled with its bulk annuity aspirations, will lead to a much more stable cash generation to support the dividend. The company also confirmed it is in its first exclusive talks in a pension close out deal / bulk annuity. The Solvency ratio will decline to 147% (currently 164%), and the leverage ratio is maintained in its target range of 25 to 30% (on Fitch basis).

In our view, this is a significant acquisition for Phoenix, they have acquired a material book of business on attractive terms that supports the current attractive dividend yield of 6.5%. The question will be whether the deal will allow the stock to be re-rated, with the yield moving closer to its UK life peers yields of Legal’s (6.2% FY18 yield) and Aviva (5.8% yield). While the company deal supports the dividend, the company requires future deals to grow the dividend, but this deal does show Phoenix is capable of finding large, meaningful deals.
11:23 am

[mozy123] 23/2/2018 11:22

Sold out here 2 weeks ago, so bad timing on my part. Portfolio was looking unbalanced. Good news for holders, if you have the cash for the rights!

[rcturner2] 23/2/2018 10:24

Except it wasn't hindsight was it?

[hvs] 23/2/2018 10:17

Glad I topped up at 734p on the 2nd Feb.

And gloating on 23rd Feb. Hindsight is good.

[hvs] 23/2/2018 10:17

Glad I topped up at 734p on the 2nd Feb.

And gloating on 23rd Feb. Hindsight is good.