Abrdn sells DFM arm in £140mn deal

The sale will see the transfer of some £6.1bn in assets under management, along with 140 employees, to the Liechtenstein-headquartered buyer.

In an announcement today (February 28), Abrdn said this part of the business would need to build much greater scale, and to do that it would need to operate under a new owner.

Abrdn has retained its model portfolio business, which chief executive Stephen Bird said was the “modern, efficient” way of doing discretionary management. 

The MPS team will be moved to sit within Abrdn’s adviser vector in order to "maximise opportunities available through that business’ distribution model".

We were spread far too thinly, but now we’re much more focused.Stephen Bird, Abrdn

Asked why Abrdn was selling its DFM business, Bird said the group wants to be much more focused on where it can grow, generate capital and invest in those parts.

The focus is on scaling up both the adviser and Interactive Investor businesses, Bird said.

The sale of Abrdn Capital follows the asset manager’s decision to sell Parmenion back in 2021, the adviser platform which returned to a profit after three years of losses under Abrdn.

Richard Wilson, CEO of Personal at Abrdn, said: “DFM is a high quality, profitable business with a strong client focus and a brilliant team. However, in line with the way the market is moving, it needs greater scale and will be a better fit for LGT.

"Within Abrdn’s personal vector, our strategy for growth is focused on integrating the services of ii with financial planning services for our customers.”

The DFM business being sold to LGT delivered around £40mn in revenue in 2022, and currently serves around 4,000 clients.

Results

Today, the asset manager also published its final results. In 2022, the group recorded an IFRS loss before tax of £615mn, following a profit of more than £1bn the previous year. 

Bird stressed on a call this morning that this figure was a non-cash accounting loss relating to falls in share prices of listed stakes, as well as tough markets impacting its investment business.

“We’re profitable,” said Bird, pointing to the group’s £1.1bn in capital.

Operating profit fell 19 per cent, to £263mn from £323mn in 2021.

The company said this dip in operating profit was down to a decline in investment revenue, as net outflows for the business totalled £10.3bn.

Bird dubbed 2022 “one of the toughest investing years in living memory”.

The group’s adviser arm and Interactive Investor - which Abrdn bought last year - partially offset falls in investment revenue.

Together, these two businesses accounted for 60 per cent of the group’s profits.

Net operating revenue in adviser business was 4 per cent higher than in 2021, and operating profit was up 16 per cent, to £86mn.

Bird also said he projects 11 per cent growth for Interactive Investor over the next five years.

Last year, the direct-to-consumer platform brought in £114mn in net revenue, and £56mn in profit which was ahead of expectations.

Inflows to the adviser platform totalled £1.6bn, while inflows to Interactive Investor totalled £3.6bn.

Now in the second year of its strategic plan, Bird said Abrdn was previously “spread far too thinly”, but that today it is “much more focused” with a healthy diversity of revenue streams.

ruby.hinchliffe@ft.com