Aberdeen To Cut Costs After Fall In AuM, Completes Acquisition Of Scottish Widows

Stephen Little

2 April 2014

saw assets under management fall 4 per cent from £193.6 billion ($322.3 billion) at the end of December 2013 to £186.5 billion for the period to 28 February.

While gross new business flows for the two months to the end of February were £4 billion, new business showed outflows of £3.9 billion for the same period.

Aberdeen said in a trading update that this decline was largely due to outflows from Asian and emerging market equities and was looking to implement additional cost savings as a result of continued outflows.

The firm estimated that it had experienced additional outflows in March of £0.2 billion.

“Conditions in emerging markets remain subdued, and we have therefore identified and are implementing some cost savings, over and above the synergies we expect from the SWIP transaction. However, we will not change our long-term approach to investment which has delivered excellent returns to our clients over time and we look forward to building on the additional scale and product diversity that the acquisition of SWIP brings,” said chief executive Martin Gilbert.

Scottish Widows

Aberdeen also confirmed that it had completed the acquisition of Scottish Widows Investment Partnership for £550 million from Lloyds, bringing total group assets up to £324.5 billion and making it the largest asset manager in Europe.

The deal, which was announced on 18 November 2013, includes the main SWIP business and related private equity fund management arm. The purchase of SWIP's infrastructure fund management business is expected to complete within the next few weeks.

Aberdeen said that 125.85 million shares would be issued to Lloyds, with a further 5.95 million to be issued on completion of the infrastructure sale. Lloyds will also be paid a deferred top-up payment of £39.4 million, payable at the end of a 12-month period after completion.

“We are pleased to have completed this important acquisition as planned and on schedule, so that we can now commence the task of integrating SWIP into the enlarged Aberdeen Asset Management Group. We will immediately begin a structured migration of funds and platforms, whilst continuing to deliver an excellent investment performance for both existing and new clients,” said Gilbert.

The agreement represents one of the most significant moves to date by Lloyds to spin off parts of its business as the bank seeks to return to full private ownership.

Compared to its plight at the beginning of the century when it was hit with losses in the capital investment trust business, the purchase of SWIP represents a remarkable recovery in fortunes for Aberdeen.

The Lloyds-Aberdeen agreement is an example of transactions made by firms as they look to recover from post-crisis problems.

The deal also comes at a time of continued merger and acquisition activity in the wealth and asset management industries. In recent days there has been the purchase by Singapore-based DBS of the Asian private bank of Societe Generale, and the merger of multi-family office SandAire and private investment office Lord North Street. Other deals have included Old Mutual Wealth’s acquisition of Intrinsic, a network of independent financial advisors.