AAM to be debt free after doubling profits

ABERDEEN Asset Management is poised to become debt free in 2011 in a move expected to give it greater clout in winning new organic business after an acquisition-fuelled expansion in recent years.

Unveiling its annual results on Tuesday, the fund manager is also expected to say that the pace of fixed income outflows after under performance in 2008 has continued to slow.

Analysts expect Martin Gilbert, group chief executive of AAM, to post more than doubled pre-tax profits and a double-digit jump in the dividend as the firm's strong Asian and emerging markets exposure has insulated it from the worst of the UK economic downturn.

Brokers at KBC Peel Hunt are forecasting pre-tax profits of 193 million against 85m the previous year, alongside a 16 per cent rise in the total dividend to 7p from 6p.

The latest performance will have been flattered by the group hitting the acquisition trail in recent years, picking up Deutsche Asset Management's UK business in 2005 and Credit Suisse's asset management arm last year. It followed that up with the purchase of Royal Bank of Scotland's fund-of-hedge-funds business earlier this year.

Stuart Duncan, fund management analyst at KBC Peel Hunt, said: "Aberdeen will say it has modest net debts now but will become cash positive next year. That is welcome as there is a sense that fund managers with stronger balance sheets are picking up more business."

AAM's debts peaked at 175m in September 2009. It revealed earlier this summer that it was managing 165 billion of assets, 3.6 per cent lower than the preceding quarter due to falling stock markets.

Meanwhile, the group has revealed that it saw net fixed income outflows of 10.6bn in the 11 months to the end of August, offset by strong inflows of equities.