Aberdeen Asset Management has announced today it is paying £84.7 million for nearly half - £13.5 billion – of the asset management business of Royal Bank of Scotland, as the troubled bank rescued by the taxpayer continues to shrink.
The move is the latest in a series of deals by Martin Gilbert, Aberdeen’s chief executive, who has been using the financial crisis to aggressively buy up rival asset management businesses during.
In November, the Scottish group, capitalised at about £1.4 billion, agreed to pay about £5 million for the contract to manage Bramdean Alternatives, the listed funds of funds investment vehicle with about £130 million in assets set up by Nicola Horlick.
Aberdeen said at the time it would use Bramdean as a stepping-stone to building up alternative private equity and hedge fund assets.
The RBS deal follows almost exactly a year after Aberdeen agreed its £300 milion purchase from Credit Suisse of £35 billion of long-only equity funds for 240 million shares, giving Credit Suisse a 24 per cent stake.
That acquisition took Aberdeen’s assets under management to about £130 billion.
Aberdeen also secured an agreement to distribute funds via Credit Suisse’s private bank and the RBS deal is likely to be designed on the same basis.
However, it is understood that Gilbert is now keen to expand into US equity management and might want to bulk up money market funds bought from Credit Suisse to achieve economies of scale.
In a statement released to announce the deal today Mr Gilbert said: “The businesses acquired from Credit Suisse mid year are now fully integrated into the group and are delivering on their considerable potential.”
In a trading statement today, Aberdeen said it had £144.1 billion of assets under management at the end of last year, which is 1.4 per cent lower than at the end of September. Gross new business for the final quarter totalled £9.6 billion but redemptions – investors cashing out of the funds - for the same period were £12.2 billion.
The RBS arm still has around $44 billion of assets under management, including money market funds and a portion of third-party assets run on behalf of Coutts, RBS’s private banking unit. It has annual revenues of £22 million and made an operating profit of £10 million last year.
RBS is expected to sell the remainder of its funds business separately, possibly to private equity.
