STANDARD Life is to return £1.75 billion of capital to its shareholders after agreeing to sell its Canadian businesses.

The Edinburgh-based life and pensions giant last night announced it is selling the operations, which are run mainly out of Montreal

and have about 1.4 million customers, to Manulife Financial Corporation for C$4 billion (£2.2bn).

It is the firm's most significant deal since demutualisation eight years ago.

Standard Life said its return of capital to investors, many of whom received shares when it demutualised and floated on the stock market in 2006, would be worth 73 pence per share.

Chief executive David Nish said the deal would deliver significant financial benefits to shareholders.

He pointed out the 73p-a-share capital return would bring the total amount of dividends and returns to investors since 2010 to 147p per share.

Standard Life shares floated at 230p in the summer of 2006.

They finished 2.8p higher on the day at 386.1p in London yesterday, hours before the Canadian deal was announced.

The company said shareholders would be able to choose whether to receive the capital being returned in the form of income or capital. This can be an important choice for shareholders, given the differing tax treatments of income and capital.

Standard Life has been operating in Canada since 1833. About 2000 of Standard Life's overall workforce of around 8500 are employed in the country.

The Scottish company said it had agreed to sell its Canadian long-term savings and retirement, individual and group insurance business, Standard Life Financial Inc, and Canadian investment management business Standard Life Investments Inc to The Manufacturers Life Insurance Company, a subsidiary of Toronto-based Manulife Financial Corporation.

The Edinburgh financial giant's fund management business, Standard Life Investments, has also entered into a global collaboration agreement with Manulife as part of the deal.

Mr Nish said: "This transaction provides our group and its shareholders with significant strategic and financial benefits. It accelerates our growth and reduces capital-intensity, while delivering substantial value today. The proposed capital return of £1.75bn , equivalent to 73p per share, will take the total amount of dividends and returns to shareholders since 2010 to 147p per share."

He added: "It is a reflection of our strong growth that operating profit from the businesses we retain following the sale are substantially higher than the whole group reported in 2010. We have transformed our Canadian operations into a business which has consistently delivered strong results, contributing to the overall success of the group. As a result, the Canadian business is now a much more attractive proposition and the sale allows us to realise fully the value of the business for our shareholders."