abrdn chief executive Stephen Bird has defended the group’s performance in the key asset management business and its controversial name change after unveiling a blockbuster acquisition.
The Edinburgh-based group announced yesterday that it has clinched a £1.5 billion deal to buy Interactive Investor.
The acquisition will give it control of a business that provides services such as share dealing and portfolio management technology for 400,000 customers.
The deal is the biggest struck by the group since Mr Bird took charge in September last year. Mr Bird wants to grow abrdn’s presence in the fast-growing market to provide investment services for consumers. The business has focused on managing money for institutions.
Mr Bird said he was delighted by the Interactive Investor deal, which followed a thorough search for a suitable target.
“This is a unique opportunity and a transformative step in delivering our growth strategy,” he said. “interactive investor is the UK’s number one subscription-based investing platform with a powerful reputation as a consumer champion.”
Mr Bird became chief executive at a time when the group was facing big challenges in the core asset management market after suffering big outflows of funds.
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It was created through the merger of pensions giant Standard Life with Aberdeen Asset Management in 2017. The enlarged group decided to focus on asset management and sold the pensions business to Phoenix.
The group changed its name to abdrn from Standard Life Aberdeen in April under a shake-up initiated by Mr Bird.
Asked whether he felt abrdn was making progress on the asset management front, Mr Bird told reporters the group’s performance in the first half showed it was on track.
“At the half year I reported the best funds flow performance since the merger,” noted Mr Bird, who held senior roles at Citigroup.
The Motherwell-born executive added: “The outflows that I reported for the first half of 2021 actually had a de minimis impact on revenue; I think it was less than £2 million on something like £750m. So, yes, we are making good progress, continue to make progress.”
Mr Bird said the group also recorded its best fund performances since the merger in the first half.
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He insisted the decision to change the group’s name to abrdn was a good one although it has been criticised.
“We are delighted with how the name has gone,” he said, adding: “The reaction from our clients has been phenomenal.”
Mr Bird noted that the name features in a high profile advertising campaign launched by the group.
“It stands for digital, data and it stands for creating better investment performance and we’re very happy with it,” he observed.
The strategy Mr Bird has developed involves the group focusing on asset management, the advisory market and what he calls the personal vector.
Mr Bird said abrdn’s personal business offers services in areas such as self invested pensions for around 25,000 customers. The acquisition of Manchester-based Interactive Investor will allow abrdn to grow personal customer numbers to around 430,000.
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Mr Bird said it will give the group a leading position in a market that is set for dramatic growth. The UK has an ageing population and people are being required to take increasing responsibility for saving for retirement.
abrdn said: “interactive investor has grown rapidly, attracting high-value customers and is expected to continue to deliver a strong profile of growth and efficiency. The Acquisition is expected to be double-digit earnings accretive in the first full financial year following Completion.”
Asked about the potential for conflicts of interest within the enlarged group, Mr Bird said interactive investor will operate as a standalone business. Its chief executive Richard Wilson will continue to run the business. He will join the abrdn board.
Mr Bird said the acquisition would not have any impact on jobs at abrdn or Interactive Investor. He is very happy with the price abrdn has agreed to pay for Interactive Investor, in which private equity firm J.C. Flowers has a majority stake.
The deal is thought to have put a multi-million pound valuation on Mr Wilson's stake in Interactive Investor, which had been considering a stock market flotation.
abrdn will have to get shareholder approval for the acquisition and to obtain regulatory consents.
Interactive Investor has £55bn assets under administration.
Shares in abrdn closed down four per cent, 9p, at 230p.
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