18th Nov 2013 08:03
LONDON (Alliance News) - Aberdeen Asset Management PLC is set to become the world's largest listed fund manager after it Monday said it has agreed a deal to buy Scottish Widows Investment Partnership Group Ltd from Lloyds Banking Group for up to GBP660 million.
Aberdeen will buy the asset manger in return for a GBP550 million stake in Aberdeen, or about 9.9%. It will also pay up to GBP100 million more in cash over five years depending on a new strategic partnership with Lloyds under which Aberdeen will manage assets on the behalf of Lloyds.
Aberdeen, which had GBP200.4 billion in assets under management at the end of Sepetmber, will add about GBP136 billion more by buying the business with annual revenues of about GBP234 million.
"We are confident that this transaction will deliver considerable additional value to our expanded client base and this will therefore benefit our shareholders," Aberdeen Chief Executive Martin Gilbert said in a statement.
For Lloyds, the sale is the latest in a line of asset disposals it has made since it was bailed out by the UK government during the financial crisis as it tries to improve its balance sheet.
The sale does not include Scottish Widows, Lloyds' pensions and investment business which it says remains a key business.
"The sale and strategic relationship are expected to result in a stronger asset management partner for the group and its customers, combining Aberdeen and SWIP's strengths across fixed income, real estate, active and quantitative equities, investment solutions and alternatives," Lloyds said in its own statement.
Lloyds said it expects to book an after-tax gain of GBP190 million on the disposal.
Separately, Aberdeen raised its total dividend for its last financial year after reporting higher earnings, assets under management and revenue.
The asset manager said revenues rose to GBP1.08 billion in the year to end-September, from GBP869.2 million a year earlier, while pretax profit rose to GBP390.3 million, from GBP269.7 million. It raised its total dividend to 16 pence, from 11.5p, as assets under management totalled GBP200.4 billion at the end of the year, up from GBP187.2 billion a year earlier.
"Whilst there are encouraging signs of recovery in certain economies around the world, including the UK, the investment environment is likely to remain difficult as structural imbalances remain unresolved. Against this backdrop our fund management teams will continue to focus on fundamental research to identify opportunities for our clients," Gilbert said.
Gross new business was GBP43.9 billion during the year, up from GBP36 billion a year earlier, although net outflows were GBP2.5 billion.
By Steve McGrath; [email protected]; @SteveMcGrath1
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