AAM funds grow following strong start to the year

ABERDEEN Asset Management (AAM) has played down talk of an imminent return of cash to shareholders after unveiling a better-than-expected 10 per cent jump in funds under management since the start of the year.

Speculation had been mounting that the firm, which doubled its net cash to £266.4 million last year, was gearing up to reveal a special dividend alongside next month’s interim results, but finance director Bill Rattray told The Scotsman that some analysts had become “a little bit ambitious about the timing”.

He said: “The board is clear that, once we do have surplus cash, it should go back to shareholders, but we haven’t made any detailed decisions.”

Rattray was speaking after AAM announced a rise in funds under management to £212.3 billion by the end of February, up from £193.4bn at the turn of the year and ahead of the £208bn expected by Numis Securities.

Numis analyst David McCann said the broker would be looking for signs of a special dividend when AAM releases its first-half results on 29 April.

However, given the recent £112m takeover of Artio Global Investors and the £17.5m purchase of a 50.1 per cent stake in private equity fund manager SVG Advisers, McCann added: “It is now more likely that this will just be improved guidance on the intended uses of cashflow, rather than an actual significant additional distribution at the interim stage.”

Analysts at Canaccord Genuity, who described AAM as their “top pick” in the sector because of its rising dividends and earnings per share, said they believed a special dividend was unlikely to arrive this year.

They said: “The enhanced distribution to shareholders over and above a mid-teens percentage rise in dividends we expect will now likely be a 2014 event given the acquisition of Artio.”

AAM continued to benefit from more investor cash going into higher-margin pooled funds, adding £35m to revenues, and has tried to slow the rush to global emerging markets stocks by introducing a 2 per cent up-front charge on new investments in its Luxembourg- and UK-domiciled funds.

Despite the strong start to the year, chief executive Martin Gilbert said: “Economic problems remain and the investment environment is likely to be challenging for some time to come.”