'Opportunistic' move from Aberdeen for £28bn in RBS funds

Published on Monday 4 January 2010 21:02

ABERDEEN Asset Management is eyeing a £100 million deal to acquire a chunk of Royal Bank of Scotland's asset management business.

• AAM's Martin Gilbert is eyeing up 100m deal. Picture: Complimentary

AAM could buy some of the $45 billion (28bn) of funds managed by the unit as soon as this month, sources close to the negotiations said yesterday.

The sale of the funds is said to be "hotly contested" after other bids were tabled by BlackRock, Schroders, Henderson and Neuberger Berman in November, according to sources.

A successful takeover would be the biggest for Martin Gilbert, AAM's chief executive, since he acquired part of Credit Suisse Group's funds unit for 298m in December 2008.

The Scots group acquired 36.4bn of Credit Suisse funds, bringing its total managed funds to 146.2bn as of September.

Analysts yesterday saw the potential deal as opportunistic rather than strategic.

Gurjit Kambo, an analyst at Numis Securities who has an "add" recommendation on AAM shares, said: "The move is a bit of a surprise because Aberdeen had talked about making acquisitions in the US where they are less well represented.

"The deal is more about getting a cheap price and creating scale, rather than making a strategic acquisition."

Analysts at Daniel Stewart & Company welcomed talk of a buyout. "We see strong rationale for additional upscaling of (Aberdeen's] funds base," it added.

Both RBS and Aberdeen Asset Management refused to comment.

In September it was reported that Morgan Stanley, RBS's advisor on the deal, was hoping to achieve a price of about 300m for the asset management division, which RBS chief executive Stephen Hester has deemed non-core to the bank's operations.

RBS Asset Management, run by Philip Basil, manages $45bn of assets which includes the wealth of clients of RBS's private bank, Coutts.

It is understood the funds AAM is aiming to buy are "quite a lot smaller" than the $45bn total. RBS's funds include a $7bn hedge fund and its clients include a range of institutional investors as well as family offices and charities.

The sell off is part of the bank's efforts to raise further capital. This is in addition to selloffs demanded by regulators following the bank's massive reliance on state bail outs last year.

RBS, now 84 per cent owned by the UK taxpayer, was told last year by the European Commission that it had to sell its insurance businesses, some business bank operations in England and its stake in California-based commodities trading firm Sempra

The sale of Sempra is expected to fetch about 2.5bn with Australian bank Macquarie, JPMorgan and Deutsche Bank (DB) as bidders.

RBS is also selling its retail and commercial units in the Asia-Pacific region, with HSBC the probable contender.

Shares in AAM added 2p to 136p, while RBS lifted 2.9p to 32.1p, the biggest riser on the FTSE 100.

Yesterday, RBS confirmed that a deal to sell its bank operations in Pakistan to MBC Bank for $87m fell through after the deal failed to meet regulatory approvals by the 31 December deadline.

Ali Munir, chief financial officer of MCB Bank, said it walked away from the deal because of a dispute over depositing its acquired shares in RBS as a security.

"We disagreed on the requirement that we deposit the sponsor's shares because the regulator didn't inform us about this requirement at the start of this deal," said Munir.