Japan's enormous Mitsu-bishi Financial Group has bought a £90m stake in Aberdeen Asset Management in a deal that will see it distribute the fund manager's products in its home market.
Japan's enormous Mitsu-bishi Financial Group has bought a £90m stake in Aberdeen Asset Management in a deal that will see it distribute the fund manager's products in its home market.
Mitsubishi UFL Trust & Banking Corporation (MUTB), a division of the multinational, took a 9.9% stake in the north-east company after snapping up shares already in issue before markets opened yesterday, on completion of year-long talks between the two instigated by the Japanese company.
It also indicated its willingness to as much as double the initial investment and take a seat on the company's board once it has regulatory approvals.
Under the agreement, MUTB can buy up to 19.9% of Aberdeen's issued share capital and will be entitled to appoint a non-executive director to its board once it breaches the 15% mark.
MUTB has also agreed that for 18 months it will not go above 19.9% unless the agreement is terminated or Aberdeen is the subject of a takeover offer.
Under the deal MUTB, whose parent company has a market capitalisation of $92bn (£52.3bn), has exclusive rights to distribute Aberdeen's emerging markets, global equities and global fixed income products to Japanese institutional investors. More products might be later added to the list.
Aberdeen chief executive Martin Gilbert said: "It accelerates a strategic objective of establishing ourselves in Japan, a key market for us."
Finance director Bill Rattray said: "We have been keen to find the right way to get into the Japanese market for a considerable length of time. It is not an easy market for a western company to break into." But he added: "Mitsubishi first approached us, having identified us as the sort of partner they would want to work with."
He said that having Mitsu-bishi take a capital stake, as opposed to a traditional joint venture or alliance, would "make sure both parties were properly committed to a business alliance".
The two companies hope to benefit from an anticipated move by Japanese pension schemes and other investors into international investments. Figures from Watson Wyatt show that, with assets esti-mated at $3084bn (£1755bn), it is the second-largest pensions market in the world, meaning a small shift in asset allocation could be lucrative for overseas fund managers.
Rattray said: "It is something that is going to be successful over the medium and long term rather than have an immediate impact."
Analysts suggested that it would be 2010 before the proceeds from business in Japan fed through into company profits. The move was welcomed by analysts, both for its strategic importance and for offering a new source of demand for Aberdeen's shares, which have been under pressure from short-sellers. Yesterday they closed up 5.5p, a 4.35% gain, at 132p.
Cazenove analyst Rae Maile said: "In our view, the decision of MUTB to commit to a stake in Aberdeen shows a level of intent to make the business alliance a success that is typically not seen in a joint venture. It is also a pleasant change in current market circumstances to see a financial company building a stake from existing share capital rather than from distressed new issuance."
