Standard Life looks to expand investment portfolio

Standard Life, the Scottish pensions and insurance firm, is in talks to buy Ignis Asset Management - a fund manager worth £400 million. A deal would make Standard Life one of the UK's biggest investment managers and marks a further move away from its traditional insurance heritage to asset management.

Ignis has £67 billion assets under management and is currently owned by life assurer Phoenix Group, which makes money by buying life insurers that are closed to new business and running them more efficiently, and has been looking to offload companies to reduce its £2 billion debt.

The asset manager would significantly boost the size of Standard Life's fund management arm, which manages around £184 billion. Ignis has particular strength in flexible bond mandates, which is a good fit for the Scottish company's strength in equities and global absolute return funds.

Last week the government effectively killed off the annuity industry by making annuities no longer compulsory from next April. Up to £15 billion a year could instead find its way to investment funds following the changes.

However, the acquisition throws further doubt over the future of Standard Life's operation in Glasgow, where around 230 people are employed. In February the company signalled its concern about a 'yes' vote in the Scottish independence referendum later this year.

Chairman of the life office Gerry Grimstone said management are concerned about the currency an independent Scotland would adopt, the setting of interest rates, regulation, the taxation of savings and the timetable for joining the European Union.

Phoenix said discussions are at an advanced stage and it will update the market at the time of its annual results on Wednesday 26 March.

The deal could be the latest in a list that includes Bank of Montreal's acquisition of F&C in January for £708 million, and Aberdeen's £550 million acquisition of Scottish Widows Investment Partnership last November.

Standard Life's shares were static at 366.10p. Phoenix shares rose 2.26% to 703.5p.