Investors set for payout from cash-rich AAM

ABERDEEN Asset Management (AAM) is expected to reveal plans to return millions of pounds to investors when it reports increased annual profits tomorrow.

Analysts say the company is building up a substantial cash pile and has been cutting its debts by converting bonds into shares, and expect it to use its full-year results announcement to lay out plans for 
either a special dividend or share buyback programme, which would take place next year.

Peter Lenardos, at RBC Capital Markets, said the wealth manager should have £300 million in the bank by the end of the year. It needs to hold a regulatory minimum of £250m, but he says the firm is generating at least £50m a quarter and will have to use it for either dividends, share buybacks or acquisitions.

“Substantially increasing the regular dividend carries the greatest risk and is thus least likely,” he said. “Acquisitions always remain a possibility, but it could take years to accrete sufficient capital to make a sizable acquisition [in cash].”

Instead, he expects AAM will signal a one-off payout to shareholders during 2013.

The company is forecast to report adjusted pre-tax profits of around £335m for the 12 months to September, up from £301.9m a year ago. In its last trading update it said some investors had been pulling their money out of equities.

Chief executive Martin Gilbert said the firm had performed strongly in an uncertain global macro-economic situation.