Irish Standard Life shareholders in line for €1,000 pay-out

Shareholders in Standard Life are in line for a windfall of almost €1,000 each after the Scottish based fund manager announced it would return £1.75 billion, or 73p per share, of the proceeds from the sale of its Canadian business last week to shareholders.

It is thought that there are about 60,000 Irish shareholders in the investment group, following its demutualisation some eight years ago in July 2006. At the time, some 94,000 Irish shareholders were granted an average of 641 shares shares in the company, resulting in an average windfall of between € 672-€ 1,335 if the shares were sold. If held, shareholders would have received an additional 32 bonus shares in 2007 so would have a total of 673 shares or so, giving a potential dividend capital return of £491.29 (€612). Share registers for 2014 show that the average retail shareholder now has 1014 shares, equating to a windfall of £740 (€925).

Standard Life sold its Canadian operation to Canadian investment group Manulife Financial for £2.2 billion (€2.7bn) last week. It said it will retain the rest of the proceeds, £0.45bn, for "general corporate purposes" and said that the sale of the business "is consistent with Standard Life's strategy and continued focus on growing fee-based businesses".

Much like the recent return to investors from Vodafone following the sale of its US business, Standard Life's windfall will be structured so shareholders can either receive the money as income (C-share income option) or capital (B-share capital option), depending on their financial and tax preference.

In the case of Vodafone, investors were typically recommended to take the proceeds as capital, given the fact that it would be liable to capital gains tax at the lower rate of 33 per cent, while an annual CGT exemption of €1,270 also applies. Receiving the payment as income may be preferable for those liable to the lower tax rate of 20 per cent.

Shareholders in the British company will have to approve the redistributiion at a special general meeting. Standard Life said it will distribute a circular containing further details on the sale today, including the notice of the general meeting, this month. Shareholders must submit their vote by 6pm on October 1st. To qualify for the payment, shareholders have to hold their shares on the record date (mid-April) to be eligible. Completion of the share disposal is likely to happen in the second quarter of 2015, most likely at the end of May in line with the final dividend.

Following the distribution, Standard Life said it will continue to pursue a “progressive dividend policy”.