AAM says Standard Life deal '˜on track' as profits jump

Aberdeen Asset Management (AAM) confirmed there is a bonus pot of money to keep top asset managers and other key staff after its planned merger with insurer Standard Life, as it unveiled a jump in earnings.

Aberdeen Asset Management chief Martin Gilbert, left, shakes hands on the deal with Standard Life boss Keith Skeoch. Picture: Graham Flack

Martin Gilbert, chief executive of AAM and joint chief executive with Standard Life’s Keith Skeoch of the merged entity when the deal goes through by end-September, said there had been “no real negative reaction” to the merger from clients.

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Gilbert said there was a “retention pot” of money to keep top managers, but declined to specify its size. There are 5,000 asset managers in the combined entity.

The merger prospectus is set to go out “next week”. Gilbert said no more on possible early job losses from the tie-up, although Skeoch has said there are bound to be “some synergies” as the businesses are put together.

“Our proposed merger with Standard Life is on track and the combined businesses will form a world-class investment company strengthening further both companies’ ability to meet the evolving needs of clients and customers,” Gilbert said.

His comments came as AAM posted a near-20 per cent rise in underlying pre-tax profits to £195.2m in the six months to end-March, on revenues up to £534.9m from £483.6m.

Crucially, the group revealed that the pace of client outflows from its emerging markets-focused equity funds had slowed in the latest period, down from £10.5bn in Q1 to £2.9bn in Q2.

Gilbert said: “These figures reflect improving sentiment towards emerging markets (and) together with favourable market conditions and the delivery of £70m of cost savings have resulted in a healthy rise in revenues and profits.”

However, the AAM boss added the caveat that investor sentiment was potentially vulnerable to the forthcoming elections across Europe.

“Global growth appears to be recovering but elections and geo-political issues will continue to weigh on investor sentiment,” Gilbert said.

The update come just a week ahead of the final round of voting for the French presidential election, involving Emmanuel Macron of En Marche! and far-right candidate and euro‑sceptic Marine Le Pen. Then there is the UK’s snap general election on 8 June, which could affect the tenor of the Brexit negotiations, followed by Germany’s federal poll in September.

AAM’s assets under management rose to £308bn from £292.8bn a year ago. Investors will receive an unchanged interim dividend of 7.5p.

Simon Troughton, group chairman, said: “Overall these results demonstrate the resilient nature of (our) diversified asset base and the focus on managing the cost base.

“Whilst the IMF (International Monetary Fund) has recently upgraded its global growth forecasts, political events may continue to generate volatility and we therefore remain cautious on the short term economic outlook.”

Shares in the Aberdeen fund manager rose 11.9p or 4.3 per cent to close at 290.9p. “The glimmers of light at the end of Q1 have continued, with a much improved Q2 flow performance,” Stuart Hunt, an analyst with Peel Hunt, said.