Nine key investment managers at Standard Life's £3.4 billion private equity arm are poised to scoop 40 per cent of future profits after the UK insurer restructured the division, the largest of its kind outside America.

The UK's fifth-largest insurer said it was converting Standard Life Investments (Private Equity) Limited, or Slipe, into a limited liability partnership (LLP) in order to incentivise top staff to bring in new business.

LLPs, common in private equity, operate a tax-efficient company structure that makes staff "members" rather than employees and more closely aligns their interests with the company's.

If the reorganisation goes to plan, as from October the nine staff will own 40 per cent of a new business, to be called SL Capital Partners LLP. The nine include David Currie, the chief executive, Peter McKellar, the chief investment officer, and Stewart Hay, investment director.

The other six investment managers are Graham Paterson, Graeme Gunn, Graeme Faulds, Craig Williamson, Roland Brinkman and Roger Pim.

Slipe employs a total of 37 staff, based in the asset management division's offices in Edinburgh and Boston.

Standard Life also said it was responding to concerns among Slipe investors about what would happen to their holdings if the insurer was taken over.

It said that, even before the insurer demutualised last June, investors had expressed "reservations" during a strategic review carried out by the insurer about change of control provisions and key-man clauses in the fund.

Shortly before the float, it emerged that Standard Life had held takeover talks with Resolution, Clive Cowdery's closed life funds consolidator. There remains speculation that the Edinburgh group may be swallowed up by a larger entity, including an international or a US insurer.

Under the terms of the LLP, executive members of SL Capital Partners have the right to buy a further 13 per cent of the firm at fair value in certain circumstances, including a change of control at the insurer. This majority stake would give them control of the company.

A spokesman for Standard Life Investments, the asset management division which currently owns the subsidiary, said investors in Slipe were long-term, often holding their investment for a period of 14 years. He said they needed to be reassured that there was a shared economic interest with Slipe's investment managers and that their rights would be protected in a takeover situation.

"In theory, if Standard Life was bought over, the new structure gives investors a greater say," the spokesman said, adding: "The main benefit is that it is more likely to lock in key people and ensure continuity of client service."

Slipe, currently a wholly owned subsidiary of Standard Life Investments, manages funds of private equity funds, including those accessible to retail investors. The unit also manages the insurer's own private equity fund, the Standard Life European Private Equity Trust, a London Stock Exchange listed vehicle with assets of more than £325 million.

Slipe's total assets stand at €5 billion (£3.4 billion).

For the year to December, Slipe reported pre-tax profits of £6.6 million on revenues of £22 million.

Standard Life will maintain its ownership of Slipe, which will own the remaining 60 per cent of the new private equity vehicle.

Standard Life shares were 2p higher at 286.5p.

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