Another blow to London as Just Group goes to Canadian manager
The London Stock Exchange lost yet another constituent to foreign ownership on Thursday, after pension insurer Just Group agreed a bumper takeover deal from Canadian asset manager Brookfield Wealth Solutions (BWS).
The FTSE 250 firm’s board told markets it had accepted a £2.4bn offer from the North American company in a deal valuing the firm at an enormous 70 per cent premium to Just’s closing share price on Wednesday.
The acquisition constitutes yet another blow to the London Stock Exchange, which has been locked in a high-profile battle to attract and retain some of the UK’s brightest companies.
This week, fintech darling Wise earned the overwhelming support of shareholders to shift its primary listing to New York, in a move its founder said would give it access to deeper pools of liquidity and greater exposure in the US. Rumours also continue to swirl that Astrazeneca, the largest company listed in London, is weighing a similar move in an attempt to shore up political support in what is its biggest market.
Meanwhile, a host of IPO contenders, whose decision to list in London would provide a shot in the arm to the UK’s capital markets, have held off floating in what has proven to be a persistently unpredictable economic and geopolitical climate.
Charles Hall, head of research at Peel Hunt, told Morning Wire the deal’s enormous premium was “yet another example of the undervaluation of the UK market, which is of clear interest to both overseas companies and private equity”.
He added: “The scale of departures from the London market is highly concerning. We expect the rate of IPOs to increase, but we need to see structural change to ensure the UK remains a leading equity market.”
Just Group takeover a signal of BWS’s UK ambitions
BWS’s takeover of Just represents the firm’s first venture into UK pension insurance. It had previously signalled its intention to enter the market after it spun off from parent company Brookfield as its own entity, specialising in the insurance market.
It will become one of very few foreign firms in a market dominated by large domestic insurers, like Phoenix, Legal and General and Aviva.
BWS chief Sachan Shah hailed the deal as a signal of the fledgling firm’s “ambitions in the UK” which earmarked as an integral region due to its “status as one of the world’s preeminent pensions market”.
“We look forward to supporting Just’s growth in the UK, building on its commitment to providing financial certainty and excellent service to its policyholders,” he said. “We own and operate insurance companies built for long-term success, supported by high quality assets, and are committed to providing ironclad retirement security products.”
Just Group’s shareholders will net 220p per share, a roughly 75 per cent premium to its average share price over the past two months.
Its board said the major premium represented “fair value” to the group’s investors, and gives them an immediate payday for the long-term strategy it has in place.
“The Just Board is pleased to recommend the acquisition by BWS, which delivers certain value for shareholders at an attractive cash premium,” said Just chair, John Hastings-Bass. “The acquisition reflects the strength of Just’s business and the significant financial and strategic progress the Just management team, led by David Richardson, has delivered in recent years.”