Aberdeen Asset Management has announced it will launch a cost-cutting drive across the business after it suffered a four per cent drop in assets on the back of a £3.9bn net outflow in the first two months of 2014.
Aberdeen’s total assets fell from £193.6bn at the end of December 2013 to £186.5bn at the end of February 2014.
The drop in assets came from both net outflows of £3.9bn and negative market performance as the firm was hurt by weakness in emerging markets, which has caused investors to withdraw money from its funds.
The firm estimated that it had suffered a further £0.2bn of net outflows in March.
As a result of the continued outflows, Aberdeen revealed it is looking to implement cost saving measures, though chief executive Martin Gilbert inisisted the firm “will not change our long-term approach to investment which has delivered excellent returns to our clients over time”.
Aberdeen also confirmed today (31 March) it has completed its acquisition of Scottish Widows Investment Partnership from Lloyds for £550m, forming the largest independent asset management firm in Europe with £324bn in assets.
The completed deal includes both the main Swip business and its related private equity arm, with the acquisition of Swip’s infrastructure business set to be completed in the next few weeks.
Aberdeen is set to issue Lloyds Banking Group with 125.85m shares in the combined business, with a further 5.95m to be paid when the infrastructure sale is done.
It will also pay another £39.4m to Lloyds, bringing the overall price up to £550m, to make up for the fact that its share price has dropped from its level of 420p when the deal was originally announced.
As part of the deal, Aberdeen is to enter a partnership with Lloyds that will lead to Aberdeen managing assets for Lloyds across the Lloyds’ Wealth, Insurance, Commercial Banking and Retail businesses.
Aberdeen said the process of fully integrating the Swip business will take two years, but it expects the acquisition to boost its earnings in the first full financial year following today’s completion of the deal.
