STANDARD LIFE ON Tuesday put a £5.5bn price on its head and revealed that it had already rebuffed a number of approaches, including one from Resolution Life, the specialist investor in life assurance funds which manages closed books of with-profits business, reports The Financial Times .
According to the paper, the life assurer is understood to have recently received an all-share merger proposal from Resolution. The mutual has also received an approach from another unidentified party seeking to acquire a significant stake, as well as tentative overtures from other unnamed suitors.
The approaches were revealed in demutualisation documents sent out to the mutual’s 2.4m members, which said Standard Life could have a market capitalisation of £4.8bn to £5.5bn based on a price range of 240p-290p had the shares traded last week.
Sandy Crombie, chief executive, said the overtures had been rejected because they “undervalued Standard Life, taking advantage of the current situation. Our duty is to ensure that no-one takes advantage of our members, so we found these approaches easy to reject”.
Accepting an approach would also have meant shelving Standard Life’s plan to demutualise, and putting a new plan in place. This is unlikely to be possible before July, when Standard Life is aiming to float on the London Stock Exchange.
But the approaches mean that the value of Standard Life is likely to be underpinned by bid speculation when it floats, as there is nothing to stop potential predators returning once Standard Life is listed.
Further consolidation in the UK life assurance market is widely expected, and while Standard Life said it had a duty to consider any further approaches, Crombie denied it was “vulnerable”.
INFLATION EXPECTATIONS hit a record of 2.7% in March, an NOP poll showed yesterday, the highest rate since the survey began in 1999, reports The Guardian.
The survey, conducted for the Bank of England, said the inflation rate the public expected to see over the next year had risen from 2.2% in November. The Bank has long been concerned rising oil and gas prices could raise inflation expectations, which have been low in recent years, as has inflation itself.
But economists said the monetary policy committee would not be over-concerned about the figure since it is low and inflation remains on target.
INVESTORS IN HEDGE FUNDS are said to be reassured the industry has enjoyed its best quarter in more than a year, reports The Times.
However, the good news was tempered by confirmation their pricey investments are still outperformed by the stock market. Measured by the Credit Suisse/Tremont hedge fund index, hedge funds rose 5.5% in the first quarter of 2006. But this compared with a 7.3% jump in the FTSE all-world index.
The FTSE All-World has outpaced the Tremont index for the past three years, and since 2003, the Tremont index has risen 40.5%, less than half the 97% jump made by the equity market.
Hedge funds last beat the stock market in 2002, and this, according to the paper, has prompted the industry’s detractors, which include Michael Steinhardt, a leading former hedge fund manager, to give warning investors will soon tire of paying high fees for the industry’s lacklustre performances.
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