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Aberdeen Asset stock value rockets £400m

MORE than £400 million has been added to the stock market worth of Aberdeen Asset Management after the company hiked its dividend by 36% on the back of a 37% surge in half-year profits.

APPETITE: Chief executive Martin Gilbert said Aberdeen Asset has enjoyed a strong first half with profits surging 37%.
APPETITE: Chief executive Martin Gilbert said Aberdeen Asset has enjoyed a strong first half with profits surging 37%.

But the company played down the likelihood it will bid for Edinburgh-based Scottish Widows Investment Partnership (SWIP).

Instead it will focus on a rebranding and marketing drive to make it better known to potential customers in the US and continental Europe.

Chief executive Martin Gilbert said: "It has been a strong start first half to the year with investors' appetites for risk assets returning."

Investors sent Aberdeen's shares up 33.4p or 8% to 450.5p. This took its market worth up to £5.4 billion from £5bn.

Aberdeen surprised the City by increasing its underlying profit to £222.8m for the six months to March 31, up from £162.2m for the same period last year.

The company continued to benefit from surging inflows into its more lucrative pooled equity funds, particularly those for emerging markets and Asia Pacific.

It also raked in more performance fees than the City had expected.

Aberdeen announced a 6p interim dividend to be paid on June 13, up from 4.4p last year and a steeper increase than analysts had anticipated.

Finance director Bill Rattray said the dividend boost "has been the plan for a long time", and the rise was eased by the strong increase in profits.

Aberdeen has more leeway with how it spends its cash, having built a sufficiently strong capital cushion that it no longer require a waiver from the financial regulator.

Mr Gilbert has a 0.1% stake in Aberdeen worth £5.4m and can expect to receive £72,000 in dividends in June.

Recent stake sales by Aberdeen's co-founder mean his holding is now less than that of Mr Rattray who holds shares worth £9.6m.

The City has long hoped for a firm indication from Aberdeen that it will consider a capital return now its balance sheet meets new regulations. But the fund manager remained circumspect.

"We will look to distribute available surplus capital to shareholders, after taking into account a comfortable level of headroom over our required regulatory capital and after investing in the development of our business, over time," Aberdeen told investors.

"Share buybacks will be considered, provided they are earnings enhancing and in the interests of shareholders generally."

Aberdeen has not cut its dividend since 2002 when it was hit by the split capital investment trust scandal.

Aberdeen's assets under management rose £25.1bn to £212.3bn over the six-month period, helped by a net inflow of £4.4bn.

Aberdeen's growth has been driven by a series of acquisitions.

But it was cool about its interest in SWIP, which manages assets of £142bn and which Lloyds Banking Group recently appointed Deutsche Bank to sell.

"It is quite unlikely we would look at it," Mr Rattray said. He said Aberdeen's focus is on increasing profits rather than building assets.

Aberdeen, which employs 400 people in Scotland, has slowed inflows into its global emerging markets portfolios by imposing charges.

Mr Rattray said it is unlikely to seek to do the same with its Asia Pacific funds because the markets in which they invest are bigger.

Sarah Ing, analyst at Oriel Securities, said: "Aberdeen continues to display strong momentum and there remains further scope for upside to estimates coupled with the commitment to return surplus capital."

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