Phoenix Group Holdings plc

Phoenix Group Holdings is committed to helping people achieve a secure financial future, offering innovative retirement solutions and long-term savings products.

The company operates as a leading UK life and pensions provider, specialising in retirement solutions, long-term savings, and investment management. Phoenix prioritises the delivery of value-driven investments with a strong emphasis on environmental, social, and governance (ESG) principles, ensuring that its investment portfolios align with the evolving needs of its customers and society. Phoenix also focuses on managing long-term liabilities and capital efficiency, seeking to provide sustainable financial growth while supporting the retirement security of its policyholders.

Assuming Phoenix Group maintains a steady market position in the life insurance and pensions sectors, with modest growth in its asset management services, the expected return of an investment in the company over the next five years is positive 16%, which equates to an annual return of 3.1%. In other words, an £100,000 investment in Phoenix Group is expected to return £116,000 in five years' time.

The degree of risk associated with an investment in Phoenix Group is ‘moderate’, with the shares having a beta that is 22% below the market (0.78 vs. 1). Additionally, Phoenix Group’s shares show a ‘medium’ level of liquidity, as evidenced by its bid-ask margin of 0.02%.

Accordingly, based on the assumptions provided on the Stockhub platform, an investment in the company is considered to be a ‘suitable’ one for you if, among other criteria, your required:

• Return level is 3.1% per year or more in absolute terms;
• Risk level is 22% below the market risk level;
• Time horizon is five years or longer;
• Bid-ask margin is 0.02% or more; and/or
• Objective is to invest in a stable, long-term provider of pensions and insurance solutions that aligns with responsible investment principles.

Fun fact: Phoenix Group Holdings was founded in 1782 and has grown into one of the UK’s largest providers of long-term savings and retirement solutions. It primarily focuses on closed life funds and the acquisition of life insurance businesses.

Operations

How did the idea of the company come about?

Phoenix Group Holdings was created with the aim of acquiring and managing closed life insurance and pension funds. Founded in 2009, it evolved from the Phoenix Assurance Company, which had traditionally provided life insurance. The modern group focused on acquiring legacy insurance portfolios—companies that no longer wrote new policies but still had substantial liabilities. By acquiring underperforming insurers, Phoenix aimed to improve efficiency, optimise capital, and unlock value from these closed books, growing into a major consolidator in the UK life insurance sector.

What's the mission of the company?

The mission of Phoenix Group Holdings is to deliver long-term value for its shareholders, policyholders, and other stakeholders by efficiently managing and growing closed life insurance and pension businesses. The company focuses on maximising the value of legacy insurance portfolios through operational improvements, capital optimisation, and the responsible management of policyholder liabilities. Their goal is to ensure financial security for policyholders while achieving sustainable, profitable growth for investors.

What are the main offerings of the company?

Phoenix Group Holdings primarily offers closed-book life insurance and pension solutions. Their key offerings include:

1. Life Insurance: Managing legacy life insurance policies that are no longer open to new customers, focusing on optimising the value of existing portfolios.
2. Pension Schemes: Overseeing pension funds and annuities for individuals and institutions, ensuring they are managed efficiently.
3. Asset Management: The company offers investment management services for the assets backing its insurance and pension liabilities.
4. Investment and Capital Management: Phoenix Group aims to enhance the value of its acquired portfolios through strategic capital management, risk optimisation, and operational efficiency.

These offerings are centered around managing closed insurance and pension books, with a focus on long-term value creation for policyholders and investors.

What makes the offerings unique?

What makes Phoenix Group Holdings' offerings unique is their focus on managing closed-book insurance and pension portfolios, businesses that no longer write new policies but still have significant liabilities. This specialisation is backed by key facts:

1. Specialisation in Closed-Book Management: Phoenix Group is one of the largest consolidators of closed life insurance and pension books in the UK, managing over £300 billion in assets. It has acquired major portfolios, including from Standard Life (2018) and ReAssure (2020), demonstrating its leadership in this niche market.
2. Operational Efficiency: Phoenix has a proven track record of improving operational performance. Following the Standard Life acquisition, the company implemented cost-saving measures that led to over £50 million in annual savings. Additionally, its £1 billion cost-saving program announced in 2020 highlights its focus on streamlining operations and improving efficiency across its legacy portfolio.
3. Capital and Liability Optimisation: Phoenix utilises advanced capital management techniques, such as those seen in the £1.1 billion pension scheme buyout from Standard Life, which helped reduce risk and unlock value. The group also manages liabilities efficiently through Solvency II capital management, ensuring long-term sustainability and optimised returns.
4. Focus on Long-Term Stability: Phoenix’s commitment to long-term financial security for policyholders is reflected in its 200% solvency ratio, well above regulatory requirements. The group also reported 9% growth in operating profit in 2023, alongside a consistent dividend track record, underscoring its ability to provide steady returns to shareholders while meeting policyholder obligations.

These factors combine to make Phoenix Group’s offerings distinct, focusing on operational efficiencies, capital optimisation, and long-term stability in the management of legacy insurance and pension portfolios.

From which place(s) are the offerings able to be purchased?

Phoenix Group's offerings are primarily available to existing policyholders and pension plan participants through their legacy insurance portfolios. Since the company focuses on managing closed books (policies no longer open for new customers), its products are not available for purchase by new clients. Instead, Phoenix manages and services existing life insurance and pension policies that were previously sold by acquired businesses.

Their offerings are available in the UK, where they have a significant presence, and the company’s services are accessible to policyholders through their digital platforms, customer service teams, and financial advisors. Additionally, Phoenix Group has operations in various European markets through acquired businesses. However, new policy purchases are not part of their current business model.

From which place(s) are the offerings promoted?

Phoenix Group's offerings are primarily promoted in the UK and Ireland, where it has a strong presence. The company's promotional efforts focus on:

1. Existing Customers: Phoenix promotes its services and offerings to current policyholders through direct communications, customer support, and digital channels, emphasising the management of legacy insurance and pension portfolios.
2. Investor Relations: Phoenix also promotes its financial products and services to investors, showcasing its strategy of acquiring and managing closed books, through annual reports, investor presentations, and shareholder updates.
3. Acquired Businesses: The company may also promote its offerings indirectly through the brands of acquired insurers, such as Standard Life and Scottish Widows, which still serve policyholders under the Phoenix Group umbrella.
4. Digital Platforms: Phoenix Group also uses its websites and digital platforms to communicate with both policyholders and investors, promoting its financial management strategies and policyholder services.

Overall, promotion is largely directed at existing stakeholders, given the closed-book nature of its business model.

What's the current strategy of the company?

Phoenix Group's current strategy focuses on sustainable growth, capital optimisation, and maximising the value of legacy insurance and pension portfolios. Key aspects of the strategy include:

1. Acquisitions and Consolidation: Phoenix continues to grow by acquiring and managing closed-book life insurance and pension portfolios, enhancing its scale and operational efficiency. They focus on integrating acquired businesses, such as Standard Life, and improving their profitability.
2. Operational Efficiency: The group aims to optimise its cost base, improve capital efficiency, and maximise returns from its existing portfolio of life insurance and pension policies. This includes enhancing digital services and improving customer experience for policyholders.
3. Responsible Capital Management: Phoenix focuses on managing its capital efficiently to support growth and provide attractive returns to shareholders. This includes maintaining a strong balance sheet and ensuring adequate liquidity.
4. Sustainability and Responsible Investment: The company is increasingly focused on aligning its operations with sustainable practices, including responsible investing, to meet evolving regulatory requirements and enhance long-term value.
5. Customer-Centric Approach: While not writing new policies, Phoenix aims to deliver strong value for existing policyholders by managing their policies effectively, providing transparent communications, and focusing on delivering on the promises made to them.

Overall, Phoenix Group's strategy is centered around strengthening its position as a leading consolidator of closed life and pension books, while ensuring long-term growth and value creation for both policyholders and investors.

Competition

Phoenix Group, as a leading life insurance and pension provider primarily focused on managing closed insurance books and pensions in the UK, faces competition from companies with similar business models or overlapping areas in insurance, asset management, and retirement solutions. Key competitors include:

1. Legal & General Group (L&G): L&G competes with Phoenix in life insurance, pensions, and retirement products. It also has significant expertise in asset management and bulk annuities, making it a major player in managing large pension schemes.
2. Aviva: Aviva is another significant UK-based competitor in life insurance and pensions. Aviva provides services in retirement planning, life insurance, and asset management. Its focus on digital transformation and customer engagement is a strategic advantage.
3. Swiss Re (ReAssure): Phoenix acquired ReAssure from Swiss Re in 2020, a move that underscored the competitive landscape in closed life books. Swiss Re remains an indirect competitor, as it focuses on reinsurance and has relationships with other UK life insurers and closed-book specialists.
4. Standard Life (part of Phoenix) and Scottish Widows (Lloyds Banking Group): Scottish Widows competes in the pensions and life insurance markets. It also provides pension de-risking solutions and bulk annuity products, similar to Phoenix’s focus, especially through Standard Life.
5. M&G plc: M&G combines asset management with pension solutions and life insurance products. As an investment manager, it competes with Phoenix in asset management and pension scheme management. Its pension expertise is a key overlap with Phoenix’s retirement-focused services.
6. Rothesay Life: Rothesay Life is a specialist insurer focusing on bulk annuities and pension de-risking solutions. It’s a major player in managing pension liabilities, directly competing with Phoenix in acquiring large closed pension books.

Phoenix Group's core strategy centers around closed book acquisitions, bulk annuities, and retirement-focused services, which makes companies specialising in managing long-term pension liabilities and closed books its closest competitors. Additionally, the push toward digital transformation, asset management capabilities, and pension de-risking solutions is common among these firms, placing them in a tight competitive landscape.

Market

To understand Phoenix Group’s market opportunity, let’s look at its Total Addressable Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM), specifically in the context of its primary business lines, which include closed-book life insurance, open-book insurance, Bulk Purchase Annuities (BPAs), and retirement solutions.

1. Total Addressable Market (TAM)

• Definition: The TAM is the total revenue opportunity available if Phoenix Group could achieve 100% market share in all its target sectors.
• Market Size: The TAM for Phoenix includes:
  • The global life insurance market, especially in regions with significant closed-book insurance business (UK, Europe, some parts of North America).
  • The global pension market, as companies seek to offload pension liabilities via Bulk Purchase Annuities (BPAs).
  • The global retirement solutions and wealth management market, given the increasing demand for retirement products as populations age.
• Estimated TAM: For Phoenix, the TAM is likely in the trillions in GBP, as the global life insurance market alone is estimated to be worth several trillion dollars annually. However, for closed-book management and pension buyouts specifically, estimates suggest an addressable market in the hundreds of billions, particularly in Europe and North America, where regulatory and aging demographics drive demand.

2. Serviceable Available Market (SAM)

• Definition: The SAM represents the portion of the TAM that Phoenix Group could realistically service, given its specific focus and operational capabilities.
• Market Focus:
  • UK and European Closed-Book Life Insurance: Phoenix Group is one of the largest consolidators of closed-book policies in the UK and Europe. The closed-book market in Europe alone is estimated to hold £300 billion to £400 billion in assets under management.
  • Bulk Purchase Annuities (BPA): In the UK, the BPA market has seen significant growth, with estimates suggesting it’s worth around £30 billion annually. As more companies offload pension liabilities, this market is expected to grow.
  • UK Retirement and Wealth Solutions: Given its acquisition of Standard Life and expansion into the open-book market, Phoenix can also tap into the retirement solutions market, worth an estimated £1 trillion in the UK alone.
• Estimated SAM: For Phoenix, the SAM is likely in the hundreds of billions of pounds, focusing primarily on the UK and European closed-book life insurance market, BPAs, and retirement solutions.

3. Serviceable Obtainable Market (SOM)

• Definition: The SOM is the portion of the SAM that Phoenix Group can realistically capture, given competition, regulatory constraints, and its existing market share.
• Competitive Position:
  • Closed-Book Consolidation: Phoenix already holds a significant market share in the UK closed-book insurance market. Its scale, expertise, and established relationships position it to capture a substantial portion of this market. Realistically, Phoenix could maintain a 10-20% share of the UK and European closed-book market, equating to £30-60 billion.
  • BPAs: Phoenix is actively growing its presence in the BPA market. Given competition from other insurers like Legal & General, Phoenix might capture 5-10% of the BPA market, which could mean around £1.5-3 billion annually.
  • Retirement and Wealth Solutions: This is a competitive market with players like Aviva, Prudential, and Standard Life. Phoenix’s SOM here could be around 5%, or £50 billion, within the UK retirement solutions market.
• Estimated SOM: Combining these factors, Phoenix’s SOM might realistically be between £80 billion to £120 billion across its primary markets. This includes substantial market share in closed-book management, a growing foothold in BPAs, and a smaller but strategic presence in retirement solutions.

Summary of TAM, SAM, and SOM for Phoenix Group:

Metric	Market Size	Key Focus Areas
TAM (Total Addressable Market)	£1+ trillion	Global life insurance, pensions, retirement solutions
SAM (Serviceable Available Market)	£200-400 billion	UK and European closed-book, BPAs, UK retirement solutions
SOM (Serviceable Obtainable Market)	£80-120 billion	UK and European closed-book, BPAs, retirement solutions in the UK

Phoenix’s strengths in closed-book consolidation, its expanding BPA business, and retirement solutions provide it with a substantial and accessible market within the broader insurance and retirement sector. This focus allows it to capitalise on predictable cash flows from closed books and emerging opportunities in BPAs, while building a foothold in the growing retirement market.

Team

As of 2024, the key members of the leadership team at Phoenix Group Holdings include:

Andy Briggs – Group Chief Executive Officer

Andy Briggs has been the CEO of Phoenix Group since 2015 and leads the company's strategic direction, focusing on growth through acquisitions and operational efficiency.

Clare Bousfield – Group Chief Financial Officer

Clare Bousfield oversees financial strategy, capital management, and reporting, ensuring the group's financial health and sustainable growth.

Keith Skeoch – Chairman

Keith Skeoch is the Chairman of Phoenix Group and has significant experience in financial services. He provides leadership and governance to the board.

Ian McKenna – Chief Risk Officer

Ian McKenna is responsible for overseeing risk management at Phoenix Group, ensuring that operational, financial, and regulatory risks are effectively managed.

Paul Brewer – Chief Operating Officer

Paul Brewer manages the operational aspects of Phoenix Group, including business integration from acquisitions and optimising customer service.

The leadership team is supported by various senior managers responsible for specific business areas such as investments, legal and compliance, and technology.

Risks

As with any investment, investing in Phoenix Group Holdings carries a level of risk. Overall, based on the Phoenix Group Holdings' adjusted beta (i.e. 0.76), the degree of risk associated with an investment in Phoenix Group Holdings is 'medium'.

Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'medium' risk, it must have a beta value of between 0.50 and 1.00. Further information about the beta ratings can be found in the appendix section of this report.

The key risks can be found below. For us, currently, the biggest risk to the valuation of the company relates to interest rate volatility (i.e. interest rate risk).

1. Regulatory and Legislative Risks

• Solvency II and Capital Requirements: As an insurer, Phoenix is subject to Solvency II regulations, which require insurers to hold a certain level of capital relative to their liabilities. Changes in these regulations or an increase in capital requirements could force Phoenix to retain more capital, reducing its flexibility and potentially impacting dividend payments.
• Pension and Insurance Regulation Changes: Since Phoenix operates heavily in the pensions and retirement solutions sectors, any adverse changes in pension or tax legislation could impact demand for its products, profitability, and its Bulk Purchase Annuities (BPA) business.
• Climate and ESG Regulation: Increasingly strict Environmental, Social, and Governance (ESG) requirements are pushing insurers to adjust investment portfolios to meet regulatory guidelines. Phoenix might need to divest from certain assets, which could reduce investment returns.

2. Interest Rate and Investment Yield Risks

• Low Yield Environment: A substantial portion of Phoenix's revenues comes from the investment returns on its policyholder funds. In a low-interest-rate environment, the company may struggle to generate adequate returns on its investment portfolio, which can impact profitability and dividend payouts.
• Rising Interest Rates: While rising interest rates might benefit Phoenix’s investment returns, they also increase discount rates, which can reduce the value of Phoenix's long-term liabilities, including its bulk purchase annuity (BPA) business. Higher rates can also reduce the value of the bond-heavy portfolios often held by insurers.
• Market Volatility: A significant portion of Phoenix's assets is invested in fixed-income securities. Market volatility can cause fluctuations in the value of these investments, impacting the solvency position, especially if there’s a sudden downturn.

3. Longevity and Mortality Risk

• Longevity Risk: Phoenix bears longevity risk, as it is responsible for paying benefits as long as policyholders live. Longer life expectancies increase the liabilities on Phoenix’s books, potentially eroding profitability, particularly for its annuity and pension businesses.
• Mortality Risk: Unforeseen mortality events (e.g., pandemics) could lead to higher-than-expected claims, increasing Phoenix's short-term liabilities and impacting its solvency position.

4. Competition and Market Dynamics

• Intense Competition: Phoenix faces competition from other insurers, especially in the bulk purchase annuity (BPA) market, where players like Legal & General and Aviva have strong market positions. Competition could impact Phoenix’s ability to acquire new business profitably.
• New Market Entrants: As Phoenix expands into open-book insurance and retirement solutions, it faces competition from established life insurers and pension providers, which may make it difficult to gain significant market share in these areas.

5. Acquisition Integration and Execution Risks

• Dependence on Acquisitions: Phoenix's growth strategy is heavily reliant on acquiring closed-book life insurance portfolios and expanding into BPAs. However, integrating these acquisitions can be complex and costly. Any difficulties in integrating new acquisitions could affect Phoenix’s operational efficiency and financial performance.
• Integration Challenges: Acquisitions bring challenges, from technology integration to operational alignment. Phoenix’s success in generating returns relies on its ability to integrate and manage these new books effectively, which is not always guaranteed.

6. Liquidity and Refinancing Risks

• Debt Levels and Refinancing: Phoenix Group uses debt financing to fund some of its acquisitions. If the cost of debt rises (e.g., due to increasing interest rates or a change in credit rating), it could increase financing costs and reduce cash available for dividends and expansion.
• Liquidity Constraints: In a market downturn, Phoenix may need to access capital markets to fund operations or meet capital requirements. Limited access to liquidity or higher-than-expected costs could negatively impact Phoenix’s stability.

7. Reputation and Brand Risk

• Customer Trust and Brand Value: Phoenix relies on a strong brand, especially in retirement and pension solutions. Negative publicity or poor customer experience, especially following an acquisition, could erode brand trust and hinder its growth efforts.
• ESG and Social Responsibility: As public and investor scrutiny of ESG practices grows, any misalignment or failure to meet ESG standards could damage Phoenix’s reputation and investor appeal.

8. Operational and Technological Risks

• Cybersecurity: Phoenix holds vast amounts of sensitive policyholder information. Any breach could lead to financial losses, reputational damage, and regulatory scrutiny.
• Legacy System Management: With Phoenix’s expansion through acquisitions, the company must integrate various IT and data systems effectively. Operational disruptions, system failures, or integration issues could impact service levels and increase operational costs.

Valuation

Dividend Discount Model

To calculate the value of Phoenix Group using the Dividend Discount Model (DDM), we need to follow the basic formula for a Constant Growth Dividend Discount Model:

Value of the Stock (V)=r−gD1​​

Where:

• D1​ = the expected dividend in the next period (i.e., the next year).
• r = the required rate of return or cost of equity.
• g = the expected growth rate of dividends.

Step-by-Step Calculation

1. Find Expected Dividend (D1​)
   • Let’s assume Phoenix’s expected dividend in the next period is £0.30 per share (this is an assumption, so you should replace it with actual forecast data if available).
2. Cost of Equity (r)
   • From earlier, we estimated Phoenix's cost of equity (using CAPM) to be around 8.9%.
3. Dividend Growth Rate (g)
   • Phoenix’s dividends have been relatively stable, with moderate growth. Let’s assume an expected dividend growth rate of 2% per year.

Putting it into the formula:

V=0.089−0.020.30​=0.0690.30​ V≈4.35

Interpretation:

The value of Phoenix Group based on the DDM is approximately £4.35 per share, assuming the expected dividend for the next year is £0.30, the cost of equity is 8.9%, and the growth rate of dividends is 2%.

Important Considerations:

• The accuracy of this model is highly dependent on the accuracy of the dividend forecast, cost of equity, and growth rate. Any changes to these assumptions would significantly affect the outcome.
• This model is most suitable for companies with stable and predictable dividend policies, such as Phoenix Group, but it may not fully capture other aspects of value, such as potential capital gains or market changes.

Appendix

Dividend

Dividends

	Interim	Final	Total	Change (%)
2024	0.2665		0.2665
2023	0.2600	0.2665	0.5265	4%
2022	0.2480	0.2600	0.5080	4%
2021	0.2410	0.2480	0.4890	3%
2020	0.2340	0.2410	0.4750	1%
2019	0.2340	0.2340	0.4680	2%
2018	0.2260	0.2340	0.4600	-8%
2017	0.2510	0.2510	0.5020	-1%
2016	0.2670	0.2390	0.5060	-5%
2015	0.2670	0.2670	0.5340	0%
2014	0.2670	0.2670	0.5340	0%
2013	0.2670	0.2670	0.5340	12%
2012	0.2100	0.2670	0.4770	14%
2011	0.2100	0.2100	0.4200	0%
2010	0.2100	0.2100	0.4200
2009		0.1527	0.1527

Dividend

	Mean	Median	Mode
Since inception	2%	1%	0%
Since the last five years	3%	3%	#N/A
Since the last three years	3%	4%	#N/A

Economic links to cash flow patterns

Economic links to cash flow patterns

Cash flow type	Introduction	Growth	Shake out	Mature	Decline
Operating	-	+	+/-	+	-
Investing	-	-	+/-	-	+
Financing	+	+	+/-	-	+/-

Beta risk profile

Beta value	Risk rating
0 to 0.50	Low
0.50 to 1.50	Medium
1.50 to 3.00	High
3.00 and above	Extremely high

Phoenix adjusted beta calculation

Date	iShares MSCI World ETF unit price (USD)	Phoenix share price (GBP)	iShares MSCI World ETF unit price change (%)	Phoenix share price change (%)
01/11/2019	96.76	745.50
01/12/2019	98.78	749.00	2.09%	0.47%
01/01/2020	97.73	758.00	-1.06%	1.20%
01/02/2020	89.67	691.20	-8.25%	-8.81%
01/03/2020	77.93	626.60	-13.09%	-9.35%
01/04/2020	86.36	601.00	10.82%	-4.09%
01/05/2020	90.70	616.20	5.03%	2.53%
01/06/2020	92.14	644.00	1.59%	4.51%
01/07/2020	96.65	658.60	4.89%	2.27%
01/08/2020	102.96	692.00	6.53%	5.07%
01/09/2020	99.52	688.20	-3.34%	-0.55%
01/10/2020	96.53	662.40	-3.00%	-3.75%
01/11/2020	108.94	716.80	12.86%	8.21%
01/12/2020	112.41	700.60	3.19%	-2.26%
01/01/2021	111.49	674.80	-0.82%	-3.68%
01/02/2021	114.27	710.00	2.49%	5.22%
01/03/2021	118.49	734.20	3.69%	3.41%
01/04/2021	123.61	711.40	4.32%	-3.11%
01/05/2021	125.60	735.60	1.61%	3.40%
01/06/2021	126.57	676.40	0.77%	-8.05%
01/07/2021	128.83	679.40	1.79%	0.44%
01/08/2021	132.02	623.40	2.48%	-8.24%
01/09/2021	126.46	645.60	-4.21%	3.56%
01/10/2021	133.84	656.60	5.84%	1.70%
01/11/2021	131.10	640.20	-2.05%	-2.50%
01/12/2021	135.32	653.20	3.22%	2.03%
01/01/2022	128.32	660.20	-5.17%	1.07%
01/02/2022	124.58	618.60	-2.91%	-6.30%
01/03/2022	128.16	614.00	2.87%	-0.74%
01/04/2022	117.42	609.00	-8.38%	-0.81%
01/05/2022	117.94	637.60	0.44%	4.70%
01/06/2022	106.88	590.40	-9.38%	-7.40%
01/07/2022	115.57	643.80	8.13%	9.04%
01/08/2022	110.28	602.40	-4.58%	-6.43%
01/09/2022	99.95	526.80	-9.37%	-12.55%
01/10/2022	107.42	542.40	7.47%	2.96%
01/11/2022	115.44	588.80	7.47%	8.55%
01/12/2022	109.25	608.60	-5.36%	3.36%
01/01/2023	117.01	640.80	7.10%	5.29%
01/02/2023	113.98	633.40	-2.59%	-1.15%
01/03/2023	117.67	546.40	3.24%	-13.74%
01/04/2023	119.79	591.80	1.80%	8.31%
01/05/2023	118.60	552.40	-0.99%	-6.66%
01/06/2023	124.52	531.80	4.99%	-3.73%
01/07/2023	128.54	550.20	3.23%	3.46%
01/08/2023	125.70	521.00	-2.21%	-5.31%
01/09/2023	120.17	482.20	-4.40%	-7.45%
01/10/2023	117.11	453.80	-2.55%	-5.89%
01/11/2023	127.78	465.20	9.11%	2.51%
01/12/2023	133.02	535.20	4.10%	15.05%
01/01/2024	134.20	505.40	0.89%	-5.57%
01/02/2024	140.28	497.30	4.53%	-1.60%
01/03/2024	144.91	552.60	3.30%	11.12%
01/04/2024	139.17	489.80	-3.96%	-11.36%
01/05/2024	145.71	496.20	4.70%	1.31%
01/06/2024	147.49	521.50	1.22%	5.10%
01/07/2024	149.97	547.00	1.68%	4.89%
01/08/2024	154.18	565.50	2.81%	3.38%
01/09/2024	156.91	559.50	1.77%	-1.06%
01/10/2024	153.73	491.20	-2.03%	-12.21%
01/11/2024	160.13	492.00	4.16%	0.16%

Phoenix beta and adjusted beta value

	Value	Comment(s)
Beta	0.642647
Adjusted beta	0.761765

Cost of equity

Cost of equity (%)

Input	Input value	Additional information
Risk-free rate (%)	4.473%	Here, the risk free rate is the US 30 year treasury bond, and is calculated as at 11th November 2024. Research suggests that for the risk-free rate, it's best to use one that has the same or similar maturity to the estimated remaining lifespan of the company. Here, we have assumed that the estimated lifespan of the company is 50 years, so we have used the longest maturity, which is 30 years.
Adjusted beta	0.76	Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more accurately predicts a future beta.
Equity risk premium (%)	5.48%	Here, the equity risk premium is in relation to the global region, and is calculated as at 1st July 2023. Research suggests that for the region of equity risk premium, it's best to use one that is the same or similar to the region of the beta market portfolio. Here, the region of the beta market portfolio is the world/global, so we have used the world/global region for the equity risk premium.
Cost of equity (%)	8.64%	Cost of equity = Risk-free rate + Beta x Equity risk premium.