Interview: Martin Gilbert of Aberdeen Asset Management

• Martin Gilbert has built Aberdeen Asset Management into a 165bn powerhouse through a series of shrewd acquisitions

The theme for this year's annual event - held alternately in Aberdeen and London - will be the role of debt in the economic development of the West and the rise of emerging markets. It is a leitmotif that Gilbert and his team believe will overarch all investment decisions for years to come.

Gilbert, who lives in the Granite City, says bringing customers to his home town is a useful reminder of the values and principles by which his investment house operates. Though its soon-to-be-published history is far from unchequered, few could dispute the firm's successful run of late.

Now one of the largest independent asset management groups in Europe, Aberdeen employs about 1,800 people in 24 countries. Its assets, all of which are managed for third parties, totalled nearly 165 billion at the end of June.

Though the value of those assets was 3.6 per cent lower than in the preceding quarter, this was due to falling markets. Analysts noted that Aberdeen secured 11.2bn of new business during the period, taking the total for the first three quarters to 36.3bn.

"With a strong, diversified asset management franchise and a strong short-term performance in most areas, we believe the group is well positioned on a medium to long-term basis," Numis analyst David McCann said in a note to investors following the financial update in July.

It's far from 2001-2, when Aberdeen's role in the split-cap scandal pushed the firm to the brink of administration.

The dramatic collapse of the split-capital investment trust sector, in which Aberdeen was a major player, resulted in a mauling for Gilbert and his splits lieutenant Chris Fishwick, as politicians and regulators were driven to action by the furore of thousands of small investors who'd seen their savings wiped out.

Gilbert, described at one point as a "sophisticated snake-oil salesman," readily admits it was one of the lowest points in his career.

Propped up by its bankers, the firm underwent a radical overhaul as it jettisoned assets to raise much-needed funds.

Other fundamental changes followed. Gilbert curtailed the cult of the star fund manager as the investment house refocused its efforts on the institutional market, which produced smaller margins but was subject to less volatility. Aberdeen's boss also developed a more circumspect view on leverage and debt as tools for growth.As a result of lessons learned from the dot-com bust of the early Noughties, Gilbert steered the firm clear of the market for collaterised debt obligations, which is at the root of the current economic downturn.

Aberdeen's rise from the ashes began in 2003, when Gilbert and Duffield teamed up to take over Edinburgh Fund Managers. The retail business went to New Star, while the Scots outfit took over the institutional mandates.

Gilbert orchestrated a far bolder strike two years later with the acquisition of Deutsche Asset Management's UK business. It was, Gilbert has said, a "once-in-a-lifetime deal" that could have ended his reign at Aberdeen had it gone wrong.

As things went, the Deutsche purchase turned out to be a shrewd move. Other deals followed, including the re-acquisition of Goodman and last year's purchase of Credit Suisse assets.

The group's Global and European funds, as well as a number of its investment trusts, are run out of Aberdeen's office in Edinburgh, where about 80 people are employed. During the past five years, the assets under their control have risen from 5bn to 25bn.

It should have come as no surprise that Gilbert would take to the acquisition trail in his pursuit of a revival at Aberdeen. His track record as a veteran dealmaker far predates the post-splits renaissance.

Gilbert was part of a three-strong team that left the Brown Robb Cruickshank firm of solicitors to set up Aberdeen Asset Management 27 years ago. They got started with the purchase of an investment trust company with some 50m in assets, for which they reportedly paid in the region of 60,000.

Their move came just days after Aberdeen FC had won the European Cup Winners' Cup under the guidance of Alex Ferguson. Buoyed by the booming oil sector and sporting success, the city was on a high.

Gilbert and his partners, Ronnie Scott Brown and George Robb, began carving their reputations in 1987, when the market crash allowed them to buy Baltic Unit Trust Managers with backing from the Merchant Navy Officers Pension Fund.

Next came the acquisition of Sentinel Asset Management. Deal after deal followed, peaking in 1997 with the purchase of Prolific Financial Management from Scottish Provident, which tripled Aberdeen's funds under management to nearly 12bn.

Along the way, Gilbert's senior partners retired, leaving him to take charge of the business.

For the moment, Aberdeen's chief executive says the investment house is taking a break from the acquisition trail. However, he does expect further opportunities to arise in the medium term amid the continuing shake-out from the economic slump.

As for investment focus, the title of the coming weekend's customer conference is prescient: "How the East Was Won".

With approval granted recently for direct investment activity in China, Gilbert sees no bounds to Aberdeen's ambitions.

BACKGROUND

As A lifelong fan of Aberdeen FC, Martin Gilbert claims to be accustomed to the disappointments that come hand-in-hand with life's successes.

The 54-year-old received an MA in Accountancy from the University of Aberdeen, followed by an LLB in Law. He spent the early years of his career with Brown Robb Cruickshank before leaving in 1983 to co-found what would become Aberdeen Asset Management.

Gilbert, whose total remuneration last year as chief executive amounted to 1.93 million, also serves as chairman of FirstGroup and Chaucer Holdings.

He is a keen golfer and sailor.

Gilbert is married to Fiona, a professor of radiology at Aberdeen University. The couple have three children.