Scottish Investment Trust strikes Aviva buy-back deal

The stake is held by Friends Life, which was acquired by Aviva in 2015.

SIT said Aviva has agreed to sell its stake at a discount of 10.75 per cent to closing net asset value per share on the business day prior to the repurchase.

Under the terms of an £87 million share repurchase agreement announced yesterday afternoon Scottish will buy Aviva’s holding of 11.4 million shares and cancel them, thus shrinking the size of the company by nearly 12 per cent.

The 129-year-old global fund, which has a stock market worth of about £735 million, will now put the transaction to shareholders for approval.

It said: “Aviva gained control of a substantial shareholding in the company in November 2015. Aviva has not previously been a long term investor in the company and therefore, given the size of Aviva’s shareholding, the board entered into discussions with Aviva to understand whether Aviva would retain its shareholding over the longer term.

“Aviva indicated to the board that it was seeking to sell its entire holding.”

SIT said an immediate financial benefit would accrue to ongoing shareholders from the repurchase, through a 1.3 per cent uplift to net asset value per share.

It added: “The repurchase will also remove a substantial shareholder who is known to be seeking an exit.”