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* Sells Ignis Asset Management to Standard Life for 390 mln stg
* To use proceeds, Ignis rev till completion to repay 250 mln stg debt
* To get 15-20 pct rev on newly acquired assets managed by Standard Life
* Full-year profit up 2 pct
* Shares rise as much as 5 pct (Adds details, CEO and analyst comments; updates share movement)
By Roshni Menon and Richa Naidu
March 26 (Reuters) - Phoenix Group Holdings said it would use proceeds from the sale of its asset management business to pay down debt, helping it focus on its life insurance business and giving it faster access to debt for acquisitions.
Shares in the company, which makes money by buying European life funds that are closed to new customers and running them more efficiently, rose as much as 5 percent on the London Stock Exchange on Wednesday morning.
Phoenix reported a 2 percent jump in full-year operating profit and said it would sell its Ignis Asset Management business to larger rival Standard Life Plc for 390 million pounds ($643.71 million).
The insurer said it would use the proceeds to repay about 250 million pounds of its Impala debt facility.
It persuaded lenders early last year to raise a cap they had imposed on dividend payments and negotiated the repayment of its 2.3 billion pound debtpile.
Phoenix cut its debt by about 700 million pounds to 1.6 billion pounds in 2013. Including the repayment from the deal, debt will come down to 1.4 billion pounds, the company said.
"The reduction in gearing will accelerate our access to the wider debt capital markets and strengthens our position as an acquirer of closed life businesses," Chief Executive Clive Bannister told Reuters.
Phoenix said last March that it was ready to consider acquisitions - for the first time in two years. However, since then, the insurer has not signed any deals.
Talks to buy Swiss Re's Admin Re business for a reported 3 billion pounds fell through in November. The Swiss reinsurer was slated to take a minority shareholding in Phoenix.
Bannister said on Wednesday the attempt to buy Admin Re was an indication that Phoenix was determined to do the right transaction.
"This is a key step in the restructuring of Phoenix, broadening the range of M&A targets that management could potentially pursue," Berenberg analyst Matthew Preston wrote in a note.
Phoenix said it agreed to a long-term asset-management alliance with Standard Life Investments as part of the deal.
"When we go out and do a closed life transaction, and Standard Life manages those assets, for the duration they manage those assets we will get a share of revenues coming from those assets, and that share of revenue will be 15 to 20 percent," Bannister said.
The insurer said it would continue to benefit from Ignis' earnings in the period of the deal's completion, which is expected by the end of the second quarter.
Phoenix is a closed life fund - it no longer accepts new customers as it lacks the capital to underpin new business. The oldest life company Phoenix has gobbled up dates back to 1786.
Phoenix's operating profit rose to 439 million pounds in the year ended Dec. 31 from 429 million pounds a year earlier.
Operating profit at Phoenix Life increased about 4 percent to 414 million pounds, while that at Ignis rose to 49 million pounds from 43 million pounds a year earlier.
Cash generation jumped 18.4 percent to 817 million pounds.
Phoenix Group, formerly known as Pearl Assurance, set a target of generating 2.8 billion in cash in 2014-2019. That would include the proceeds from Ignis's divestment.
Phoenix shares were one of the top percentage gainers on the FTSE-250 Midcap Index. They were up 3.8 percent at 737 pence at 1141 GMT. ($1 = 0.6059 British Pounds) (Reporting by Roshni Menon and Richa Naidu in Bangalore; Editing by Joyjeet Das)