• Text size      
  • Send this article to a friend
  • Print this article

Aberdeen chief: takeover deals good for sector

ABERDEEN Asset Management chief executive Martin Gilbert has hailed its takeover of Scottish Widows Investment Partnership (SWIP) and Standard Life's acquisition of Ignis Asset Management as good for the Scottish funds sector by keeping money north of the Border.

GOOD NEWS: Martin Gilbert believes the recent deals will make Aberdeen and Standard Life major players.
GOOD NEWS: Martin Gilbert believes the recent deals will make Aberdeen and Standard Life major players.

Aberdeen's share price surged 8.8% to 424.7p yesterday after the City was cheered by discovering that the company's assets under management had held up better than expected during a recent sell-off in emerging markets and Asian shares, two of its core areas.

But the fillip came too late to save Aberdeen from having to make an additional £39.4 million payment to compensate SWIP's seller Lloyds Banking Group for a fall in its share price below 420p.

Mr Gilbert said such deals as these ensured that billions of pounds in assets remain managed north of the Border.

"I think it is really good news for the fund management industry in Scotland to have deals such as this and the Standard Life-Ignis deal. It means that the assets will remain in Scotland and I think what it does do is really build both Aberdeen and Standard Life into major players now."

Aberdeen and Edinburgh-based SWIP combined will have assets of £324.5 billion.

Aberdeen is paying Lloyds around £550m, which means the part-nationalised bank will get a 9.9% stake in the fund manager.

The additional £39.4m will be paid in cash or shares in a year's time, which could lift Lloyds's stake higher.

Aberdeen may also pay Lloyds up to another £100m in cash over the next five years, depending on how well the Lloyds assets perform.

Peter Lenardos, analyst at RBC Capital Markets, said: "The SWIP transaction, in our opinion, continues to give Aberdeen the diversification it needs: exposure to UK and European equities and Sterling fixed income, greater scale in property, access to retail investors, and a substantially reduced reliance on emerging markets and Asia-Pacific equities."

Edinburgh-based Standard Life said last week it has agreed to buy Ignis for £390m in a deal that is expected to see the last big fund manager leave Glasgow.

Aberdeen suffered net outflows of £3.9bn in the two months to the end of February, although predictions of net outflows of just £200m for March reassured some investors.

"It has been a really tough time for emerging markets but hopefully we are through the worst," Mr Gilbert said.

Goldman Sachs analyst Chris Turner said: "Although flows in the group's core equity products were a little worse than our forecast, the group's aggregate AUM (assets under management) was less impacted by adverse market moves than we had expected."

In its announcement to the Stock Market Aberdeen said it planned to offset the weakness in revenues with "significant additional cost savings" above the £55m it is seeking from the integration of SWIP over the next two years. Mr Gilbert conceded some posts would be cut, and said the move would mean less spending on marketing and advertising and lower bonuses for staff.

He has taken a more relaxed stance over September's independence vote than many others in the financial services industry.

"I think there will be plenty of time after the referendum to make whatever plans are necessary or changes are necessary," he said.

This contrasts with the likes of Standard Life and Alliance Trust, which have indicated they are putting in place plans to move some businesses in the event of upheaval following a yes vote.

Contextual targeting label: 
Finance

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

223590