Friends Provident to sell controlling stake in F&C

Source: Stock Market Digital

Date :31/01/2008 13:27:30

Friends Provident is to sell its controlling stake in F&C Asset Management as part of the financial services group’s restructuring efforts.

In the firm’s strategic review released this morning, Friends said that it would dispose of its 52 percent stake in the UK-listed fund manager as well as pull out of the wealth management business, other than in the manufacture and administration of life and pensions products.

Strategic review

In a statement, the group said its wealth management businesses – F&C, Lombard and Pantheon Financial - were no longer part of a revised strategy to “transform the company into a more streamlined, more focused and more profitable business.”

The main objectives of the review were “to enhance shareholder value and to address the challenges the Group has encountered in the light of changing market conditions,” Sir Adrian Montague, executive chairman said.

“Once fully implemented, these changes will allow the Group to offer shareholders steady returns from improved profitability and cash generation in its UK business, with opportunities for higher margin growth in selected overseas markets," he said.

F&C ownership

F&C currently manages about £33 billion on behalf of Friends Provident, with many customers under a variety of unexpired terms of up to seven years.

Friends said while it will be advantageous to continue to co-operate with F&C for product development and distribution, it is “not necessarily essential” to maintain its ownership.

“The most appropriate way forward would be to review its ownership with a view to maximising value of its stake for the benefit of shareholders.”

“The board will work with the board and management of F&C to establish the best way of achieving this.”

Separately, the group announced that underlying pre-tax profit for 2007 would be only £20 million, following a raft of one-off charges and changes to actuarial assumptions.

January 31, 2008