Macquarie to gatecrash Swip tie-up with £500m bid

Swip managing director Dean Buckley has no shortage of suitors, with Australia's MacQuarie out to disrupt Aberdeen move. Picture: Contributed
Swip managing director Dean Buckley has no shortage of suitors, with Australia's MacQuarie out to disrupt Aberdeen move. Picture: Contributed
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Australian investment bank ­Macquarie is understood to be planning a £500 million cash bid for Scottish Widows Investment Partnership (Swip), gatecrashing a possible tie-up with rival Aberdeen Asset Management.

Aberdeen last month said it was in talks to buy Swip in a deal that would create the largest listed fund management group in Europe, but sources in the US said Sydney-based Macquarie, which manages about £236 billion through its Macquarie Funds Group (MFG), could show its hand within the next two weeks.

A spokeswoman for Macquarie declined to comment, but Investec analyst Ian Gordon said the prospect of a competitive bidding process emerging for Swip was “good news for Lloyds”.

Gordon, who yesterday upgraded Lloyds’ shares from “hold” to “buy”, said a disposal of the fund management arm would potentially deliver a gain in the “low hundreds of millions”.

The lender, which is 33 per cent owned by the taxpayer, recently posted an 83 per cent leap in underlying profits to £1.5 billion for the third quarter and revealed it was talking to regulators about the resumption of dividend payments.

Edinburgh-based Swip, headed by managing director Dean Buckley, has more than £145bn funds under management, while Aberdeen, co-founded by chief executive Martin Gilbert, looks after about £202bn in assets.

Aberdeen has stressed there was no certainty that a deal would be done, but any transaction would be funded by ­issuing new shares to Lloyds – effectively giving the taxpayer a stake in the business – with additional cash payments depending on future performance. It said the tie-up would add “scale and diversity” to its range of products, but recent reports said the deal could lead to about 150 job losses among a combined workforce of 2,500.

Although the firm had been touted as a possible buyer since Lloyds hired Deutsche Bank in April to advise on a sale of Swip, it had previously played down speculation about its interest and last month’s announcement surprised the market. Analysts at RBC Capital Markets said the potential deal could “impair sentiment towards the stock”. 
 As well as Aberdeen and Macquarie, other names that have been linked to a bid include US-based Ameriprise and BlackRock, and sources said a deal could be struck before the end of this year.

Lloyds declined to comment yesterday. The bank, which was rescued by the taxpayer during the financial crisis, is slimming down as it prepares to return to full private ownership after the UK government recently began selling down its stake in the business.

Last month it agreed to sell its Australian operations for about A$1.45bn (£850.6m) to Westpac Banking Corporation, which is understood to have beaten a rival bid from Macquarie, and in August offloaded its German life insurance business as part of chief executive Antonio Horta-Osorio’s strategy of focusing the lender’s efforts on its home market.

Horta-Osorio is aiming to reduce the group’s international coverage to fewer than ten countries by the end of next year, down from 30 in 2011.

Shares in Aberdeen, which is due to post its annual results on 25 November, closed down 20.2p, or 4.6 per cent, at 422.2p, while Lloyds ended the day 1.8 per cent higher at 75.16p.