FBD approves joint venture move

FBD shareholders have unanimously voted in favour of the financial services group hiving off its non-core property and leisure division into a joint venture vehicle.

At an extraordinary general meeting in Dublin yesterday, shareholders voted 99.8% in favour of FBD Property & Leisure becoming a 50-50 joint venture between FBD and separate investment group Farmer Business Developments, which already owns a 25% stake in FBD.

The move should substantially strengthen Property & Leisure’s funding structure and allow FBD to focus on its core insurance and financial services interests.

Bloxham Stockbrokers said after the vote: “We see a number of benefits from the proposed transaction, key among them being allowing the plc to focus its resources on its core insurance underwriting business, while at the same time lowering its exposure to fluctuations in property valuations.

“In addition, from an investor perspective the reported operating profit will no longer be impacted by the operating results of Property & Leisure — all owing for a cleaner analysis of the underlying core business,” Bloxham Stockbrokers added.

FBD announced the plans for the joint venture in August, coinciding with the publication of its first-half financial results; a set of figures heralding the group’s return to profitability.

The deal also includes a clause that allows the shareholdings to change over time, depending on property values.

Speaking at the time, group chief executive, Andrew Langford called it a “significant strategic step for the group, which will allow us to focus on the core insurance underwriting business, reduce our exposure to fluctuations in property valuations, reduce both the group’s debt and its loan guarantees and enhance the ability of property and leisure to realise value over time”.

The Property & Leisure division owns a number of office, hotel and leisure properties in Ireland and Spain.