Aberdeen Asset Management has confirmed it will buy Swip in a £550m deal which will see it become the largest listed investment group in Europe.
The deal will see Aberdeen “form a long-term strategic relationship with Lloyds Banking Group” which will involve Aberdeen acquiring Scottish Widows Investment Partnership (Swip) and its related private equity and infrastructure fund management business.
The transaction, expected to complete at the end of the first quarter next year, will see Aberdeen’s assets grow by roughly £136bn and see annualised revenues rise by approximately £234m.
This will make its assets under management roughly £350bn and push it past Schroders at £250bn in terms of size.
Aberdeen will also acquire Swip’s Investment Solutions business which designs, develops and manages products for Lloyds’ wealth clients.
“The strategic relationship will operate across Lloyds’ wealth, insurance, commercial banking and retail businesses and is expected to result in a stronger asset management offering for customers,” a statement from Aberdeen said.
Aberdeen will issue 131.8m new shares to Lloyds, equivalent to £550m and representative of 9.9 per cent of the size of the combined group.
There will also be a payment to Lloyds of £100m linked to five-year performance.
Aberdeen will also benefit from “distribution opportunities” with Lloyds’ retail business.
Martin Gilbert, chief executive of Aberdeen, said: “This transaction is significant for the long-term prospects of Aberdeen in a number of ways.
“It strengthens our investment capabilities and adds new distribution channels; the acquisition of Swip adds scale to our business across a range of asset classes; and it also introduces a strategic relationship with Lloyds Banking Group.
“We are confident that this transaction will deliver considerable additional value to our expanded client base and this will therefore benefit our shareholders.”