AbrdnOct 26 2022

Abrdn: Share price doesn’t reflect adviser business

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Abrdn: Share price doesn’t reflect adviser business
Noel Butwell, chief executive of Abrdn’s platform and advice businesses

Abrdn’s platform boss has said the company’s struggling share price does not currently reflect the true value of its adviser business.

The asset manager’s share price has fallen 42 per cent this year, relegating it from the FTSE 100 last month with reports suggesting it could pay out up to £500mn to shareholders.

Noel Butwell, chief executive of Abrdn’s platform and adviser business, told FTAdviser there was a “huge amount of untapped value” in Abrdn which he and the business wants to unlock.

Currently, the group’s market cap is £3.26bn, around half of which is made up of Interactive Investor, the direct-to-consumer investment platform it bought for £1.5bn last year.

Interactive Investor has changed the shape of Abrdn and made us realise there’s more to us than asset management.Noel Butwell, Abrdn

Abrdn’s adviser business is made up of two platforms, which hold some £68bn of assets.

Separately, Abrdn has an in-house financial planning business, Abrdn Financial Planning Limited, which holds £5.5bn in assets. This business sits within its personal business, run by Richard Wilson.

Based on Abrdn’s sale of Parmenion, valuations have made up around 1.275 per cent of assets. By the same maths, Abrdn’s platforms would be worth £867mn. 

In its results last year, the group valued the financial planning business at an additional £110mn. This takes the total value of Abrdn’s adviser business to £977mn.

But Abrdn uses a different valuation itself which sees its adviser business valued at closer to £1.7bn.

“Stephen Bird [Abrdn’s chief executive] has always said the asset manager’s adviser arm is the biggest hidden gem in the business,” Butwell explained.

“My job is to make it less hidden. You don’t get the value of this business in the share price at the moment.”

Abrdn plans to “retire” the ‘Wrap’ and ‘Elevate’ names as it prepares to move the platforms to a single technology on FNZ.

The provider, which claims some 2,500 advice firm users around 50 per cent market usage, wants to serve IFAs on a more “modular” basis, according to Butwell.

“Ultimately we want a core underlying platform with different offerings,” he explained.

Wrap offers a wider array of discretionary investment services and a broader range of investment solutions than Elevate.

“We still want to reflect different segments [of the IFA market],” said Butwell.

The platform provider is on track to launch a new portal on Wrap before the year is out, which intends to revamp the way advisers complete client reports and navigate tax wrappers.

“Our initial focus is on Wrap, however Elevate advisers will also benefit from these developments as we bring our platform solutions onto a single, yet more flexible, technology instance,” Butwell explained.

“As we go through the programme we will provide more details on that journey and how we will deliver these enhancements.”

It is also planning to move a book of self-invested personal pensions it bought from Phoenix onto its platform.

Sometimes a business [Parmenion] is more valuable outside the group.Noel Butwell, Abrdn

In a note sent by Barclays Capital last month, analysts said Abrdn’s adviser platform was largely extracted from Phoenix and on FNZ. 

They said the transfer was set to increase the capacity for advisers on Abrdn’s platform and help it meet the target of being the primary platform for 70 per cent of advisers.

Around half of the group’s profits in the first half of this year were generated by the financial adviser and personal segments of the business. It said it did not anticipate this proportion to fall back in the future.

Interactive Investor ‘transformed’ Abrdn

Butwell said the purchase of Interactive Investor has changed the shape of Abrdn and made it realise there’s more to Abrdn than simply asset management.

He said the intention is to keep the D2C platform separate from the adviser platforms, but he said he can envision clients moving between Interactive Investor and Abrdn’s advised offerings.

“You’ve got to cover all of it,” said Butwell. “I can see clients moving between the two.”

Interactive Investor added around 19,000 customers in the first half of this year, with around 400,000 customers overall. 

“It’s accelerated our growth, diversified revenues, and transformed our position in UK wealth,” said Butwell. “It’s a highly efficient business.”

The group has also been working on its hybrid digital retirement offering. In January, it hired Paul Titterton, a former Virgin Money executive, to become the first head of digital solutions at its personal wealth business.

Abrdn also acquired investment platform Finimize in October last year for an undisclosed amount.

Chief executive Bird, who took over in September 2020, has previously hinted he wants to grow the firm through acquisitions.

‘No regrets’ on Parmenion

Asked whether the group regrets selling adviser platform Parmenion for £102mn in 2021, a platform which has now been valued at up to £400mn, Butwell said it comes down to Bird’s focus on simplifying the business.

He said Abrdn’s sale of Parmenion was part of that. “We made the decision to put growth behind Elevate and Wrap, which meant we weren’t competing against the same clients,” said Butwell

“Sometimes a business is more valuable outside the group. We have no regrets about that decision.”

Addressing Abrdn’s dwindling share price, Butwell acknowledged a “large part of business” is asset management, which is globally exposed and “certainly playing out in share price”.

“Financial advisers understand the market,” Butwell told FTAdviser. “We’re no different to our peer group in terms of share price pressure. We point to the strength of the balance sheet.”

ruby.hinchliffe@ft.com