AAM eyes hedge fund bargains

Published on Thursday 13 November 2008 20:33

MARTIN Gilbert, the head of Aberdeen Asset Management, is planning to go trawling for distressed "funds of hedge funds" as valuations fall in the wake of investor panic.

The AAM chief executive said the funds were valued at "manageable" levels and were ripe for consolidation. "Funds of hedge funds (Fohfs] and funds of private equity are a lot cheaper than they were six months ago, and they are significantly cheaper than they were two years ago," he said.

"Fohfs, for example, were selling for 15 per cent of assets under management two years ago. They are now down to very, very manageable levels, very attractive levels and a lot of them are sub-scale, so I think there is an opportunity to consolidate."

While a deal was not imminent, Gilbert said the firm would structure its fees differently to most hedge funds, charging no performance fee (in which the manager takes a share – often 20 per cent – of profits) and would charge a reduced management fee.

Gilbert, who co-founded AAM 25 years ago, predicted that there would be further consolidation in the funds industry over the next year if market volatility continued, saying "an amazing number of people are talking to each other in the funds business".

While he sees the business as an acquirer, he moved to dispel persisting rumours that the company planned to buy troubled New Star Asset Management, the London-based fund firm run by John Duffield.

"These rumours are not true," Gilbert insisted.