Aberdeen Asset Management Plc, Scotland’s largest fund manager, is in talks to buy Lloyds Banking Group Plc’s Scottish Widows Investment Partnership, according to three people with knowledge of negotiations.
Aberdeen has joined the race for the asset-management arm of Scottish Widows, said the people who asked not to be identified because the matter hasn’t been made public. The acquisition of Scotland’s third-largest fund manager would make Aberdeen Europe’s biggest publicly traded fund company, with assets of about 350 billion pounds ($561 billion).
A purchase of Lloyds’s SWIP fund-management operation would come as a reversal of Aberdeen’s strategy to focus on growth without acquisitions and returning cash to investors. Aberdeen Chief Executive Officer Martin Gilbert had previously called an acquisition of Scottish Widows Investment “highly unlikely.”
“I don’t think it would go down well with investors,” said David McCann, a London-based analyst at Numis Securities Ltd. with a buy recommendation on Aberdeen shares. “Given what they have said so many times, the credibility of the management would fall through the floor.”
Aberdeen shares rose 1.2 percent to 393.2 pence in London, the highest since July 29, extending its gain this year to 7.1 percent this year. Lloyds gained 0.4 percent to 74.21 pence.
Lloyds CEO Antonio Horta-Osorio, 49, is seeking to strengthen the firm’s balance sheet by selling assets, cutting costs and eliminating jobs following the bank’s government bailout in 2008. Britain’s largest mortgage lender, based in London, purchased Scottish Widows, which runs both a life-insurance business and the SWIP fund-management operation, for 7.3 billion pounds in 2000.
Macquarie Group Ltd., Australia’s largest investment bank, is among companies weighing an offer, said two of the people. Royal Bank of Canada, the country’s biggest lender by assets, and Natixis, the French investment bank and asset manager, are also considering a bid, three people familiar with the matter said in June.
Lloyds hired Deutsche Bank AG to advise on the sale of the unit, according to people familiar. It had 145.8 billion pounds of assets under management at the end of the first half.
Aberdeen, which oversaw 201.7 billion pounds as of Aug. 31, paid 250 million pounds in 2008 to acquire 75 billion Swiss francs ($82 billion) in assets under management and divisions in Europe, the U.S. and Asia from Credit Suisse Group AG.
Officials at Lloyds, Aberdeen, Macquarie, RBC, Natixis and Deutsche Bank all declined to comment.