ABERDEEN Asset Management has struck a deal to buy a hedge fund specialist with operations in New York and London.
The acquisition of Arden Asset Management will add about $9 billion (£6bn) to Aberdeen’s funds total, taking it to more than £310bn.
An industry observer noted that institutional investors were looking to diversify their portfolios, with equity and bond markets close to record highs against a backdrop of ultra-loose monetary policy from central banks including quantitative easing measures.
Investors were, the observer noted, looking for alternative risk-return profiles that were not correlated to mainstream indices, such as those offered by hedge funds.
Martin Gilbert, who as chief executive of Aberdeen has overseen a raft of acquisitions over the years, said: “Institutional investors are looking to hedge fund solutions to offer risk-return profiles not available via mainstream strategies and traditional asset classes.”
He added: “The acquisition of Arden emphasises further Aberdeen’s commitment to diversifying its overall business and to growing its alternatives platform. The deal significantly strengthens our hedge fund solutions capability and expands our global client base.
“Arden’s liquid alternatives platform in the US is particularly attractive as it provides investors with exposure to a portfolio of hedge fund-like strategies but importantly offers daily liquidity.”
Aberdeen said that the Arden deal would position it as a leading hedge fund investor with around $11bn of assets under management in this area.
A spokesman for Aberdeen said Arden’s team of about 20 people would join around 10 staff working in London for the Scottish investment house in its existing hedge fund solutions business.
The spokesman said the Arden funds would continue to be managed from New York and London.
The price being paid for Arden was not disclosed.
The Aberdeen spokesman said: “The amount isn’t significant.”
In a statement to the stock market, Aberdeen said: “This acquisition is in line with Aberdeen’s strategy to strengthen and grow its global alternatives platform, encompassing multi-manager research and selection across hedge funds, private equity, and property, along with direct investments in infrastructure projects.
“This means that Aberdeen can offer its clients access and exposure to high-quality alternative investment.”
Aberdeen noted the Arden transaction was subject to regulatory approval from the UK’s Financial Conduct Authority and notification to the Irish Central Bank, and also depended on obtaining the approval of shareholders of certain mutual funds.
And it highlighted its aim of completing the transaction during the fourth quarter of this year.
Averell Mortimer, chief executive and chairman of Arden, said: “We are thrilled to be joining Aberdeen, a leader in the global asset management industry. The deal creates a combined hedge fund platform with international reach, overseen by an experienced team of investment and operational professionals.
“Becoming part of Aberdeen will enable us to share ideas and best practice that will assist in continuing to build on our proven track record of developing customised hedge fund and liquid alternative solutions for clients worldwide.”
In May, Aberdeen announced the acquisition of private equity specialist FLAG Capital Management.
Aberdeen noted that, following completion of the FLAG and Arden acquisitions, its alternatives platform would have total assets under management of more than $30bn (£19bn).
This alternatives business is overseen by Andrew McCaffery.
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