Aberdeen Asset Management Plc, the largest Scottish fund manager, announced takeovers of fixed-income and private-equity firms that will propel assets above 200 billion pounds ($310 billion) for the first time.
Aberdeen agreed to pay $175 million for New York-based Artio Global Investors Inc., a fixed-income specialist, the fund manager said in a statement today. It will also buy 50.1 percent of SVG Advisers Ltd., a London-based private equity fund-of-funds manager, for 17.5 million pounds, boosting Aberdeen’s assets in that segment more than sixfold.
Chief Executive Officer Martin Gilbert said the deals will give Aberdeen better scope to attract money in the U.S. They’re the first fund acquisitions the Aberdeen, Scotland-based company has made since it bulked up with a string of purchases from Deutsche Bank AG, Credit Suisse Group AG and Royal Bank of Scotland Group Plc between 2005 and 2010.
“Half the world’s assets under management are in America, and we believe we have the products to expand in the U.S.,” Gilbert said on a call with reporters. “We would like to see more assets coming into alternatives, property and fixed income.”
The company had 193.4 billion pounds of assets at the end of December. Aberdeen’s asset base is about eight times as large as it was in 2005, before it bought about 46 billion pounds of funds under management from Deutsche Bank followed by a similar-sized purchase from Credit Suisse in 2008.
The shares rose 2.5 percent to a 12-year high of 426.4 pence, lifting Aberdeen’s market value to 5.1 billion pounds and extending its gain over the past year to 62 percent. The stock was the second-best performer in the benchmark FTSE 100 Index.
Arun Melmane, an analyst at Canaccord Genuity Corp. lifted his rating on the stock to buy from hold and increased his 12-month price target to 460 pence from 400 pence.
“Both deals appear sensible,” Stuart Duncan, a London-based analyst at Peel Hunt LLP who has a hold rating on Aberdeen, said in a note. “Artio goes some way to address a strategic imperative for Aberdeen, namely to build its U.S. distribution capabilities.”
Following the takeover of Artio, Aberdeen will have about 23 percent of its assets in bonds, or more than 45 billion pounds, Chief Financial Officer Bill Rattray said.
Artio’s assets shrank to $14.3 billion as of Dec. 31 from $53.3 billion at the time of its initial public offering three and a half years ago. Almost two-thirds of its assets, or $9.8 billion, are in bonds. Artio used to be the U.S. unit of Julius Baer Group Ltd., Switzerland’s third-largest wealth manager.
Aberdeen is paying $2.75 a share for Artio. Shares of the U.S. fund manager jumped 33 percent to $2.72 at 11:57 a.m. in New York trading. The company first sold shares to the public in December 2009 for $26 each.
“Artio has been a company in crisis for years,” Peter Lenardos, an analyst RBC Capital Markets with an outperform rating on the stock, said in a note to clients.
Aberdeen said its net cost for the deal will be about $40 million as Artio is debt-free and has $136 million in cash and seed investments. Some jobs at Artio are likely to be lost in support functions, Gilbert said, declining to be more specific. The transaction is due to close at the end of the second quarter or early in the third, he said.
Aberdeen is buying the controlling stake in SVG Advisers from SVG Capital Plc, the biggest backer of private-equity firm Permira Advisers LLP. SVG’s 4 billion pounds under management will bring Aberdeen’s private equity fund-of-funds assets to 4.7 billion pounds.
SVG Capital CEO Lynn Fordham will run the combined business. Aberdeen has an option to buy the rest of SVG Advisers in three years for between 20 million pounds and 35 million pounds. Gilbert said Aberdeen would have preferred to have bought 100 percent of the firm at once.
“It is important to get the value of the funds for SVG investors over the period,” Fordham said in a telephone interview. “We see great opportunities to grow the business over the next three years.”
Fordham said she expects Aberdeen to pay the maximum price when it exercises its option to buy the remaining stake.