Deutsche Bank’s UK portfolio acquired by Aberdeen |
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Thu, 07 Jul 2005 20:05
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LONDON: In a deal which will create Britain’s biggest fund house Aberdeen has agreed to buy the UK businesses of German asset management firm Deutsche Bank. The £265m purchase will be funded partly by a rights issue of £215m fully underwritten by broker and financial advisor JP Morgan.
Martin Gilbert, chief executive of Aberdeen Asset Management said the deal is “a transformational acquisition” for his company. The acquisition will enhance Aberdeen’s scale and give it a substantial chunk of fixed income. Operations being acquired include a global fixed income business, a London-based UK and global equities business, an open-ended investment company (OEIC) and a multi-asset business. These businesses were acquired by Deutsche bank when they took over Morgan Grenfell in 1989. However, the German firm was never able to successfully integrate these assets into its other fund management operations.
Despite the portfolio of world-class businesses, Deutsche Bank had been struggling for four months with attrition and losing investment mandates consequent to poor performance in equities. Its assets under management are believed to total around £50bn.
With this acquisition, Aberdeen’s total assets under management would treble to around £75bn. The fund house’s chief was able to negotiate terms of deferred payment by which Aberdeen will pay the full price only if it is able to stop further losses to the acquired businesses. Aberdeen’s plans for their new investment include outsourcing back-office functions. New fund management operations will not result in any job losses, they assured.
The acquisition process will be broken into three stages. First, a guaranteed cash payment of £165m will be made towards open-ended investment and fixed-income businesses. Another payment of an amount between £35m and £55m* would be made at completion (*depending on the net asset value of the acquired businesses at the date of completion). The firm will also make deferred payments of up to £45m for the equities and multi-asset businesses.
Aberdeen beat rival bidders BNP Paribas and several other buyers who wanted only the fixed income businesses of DeAM. The German investment firm wanted to sell the business as a whole in order to minimise disruption that was likely to be caused to clients and employees. Aberdeen was able to get the deal as they offered to buy the whole business.
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