For many months Aberdeen Asset Management
has faced the same awkward question of how it will reverse
its recent slump. What
strategy could co-founder, CEO and famed dealmaker Martin
Gilbert come up with to turn things around?
found out on 4 March, when Aberdeen was rushed into revealing
its strategy when news broke of it being deep in merger
discussions with Scotland’s biggest asset manager
Standard Life. The £11bn ($13.5bn) all-share merger will
entail Aberdeen shareholders receiving 33.3% and Standard Life
66.7% of the combined group, for which Gilbert and Standard
Life CEO Keith Skeoch will be co-CEOs.
has had torrid time over the past couple of years, finding
itself on the wrong side of some powerful industry trends. It
had been haemorrhaging assets, losing £100bn in outflows
over 15 consecutive quarters, and its share price fell
precipitously between April 2015 and February 2016, from a peak
above 500p to a low barely above 220p, before heading to 270p
on the eve of the merger announcement.
long-term trend vexing all active managers is the steady drift
to passive management and the associated pressure feeding
through into active fees, which could still have much further
to run. "I wish I knew the answer to that – then we
could plan much more efficiently," says Gilbert. "My instinct
is that it will get tougher in the big developed markets. In
emerging markets we are not seeing as much fee pressure.
It’s going to get tougher."
second issue for Aberdeen was the cyclical shift to the
resurgent US economy, where it is weak, at the expense of the
long-term 'rise of Asia’ story, where it is
particularly strong. The problem is not with its performance
– it perhaps does not match its glory days of the
2000s but is certainly respectable – but more that
sentiment left its core markets and competitors had narrowed
do not think it will be the end, sadly," says Gilbert,
anticipating another quarter of outflows. "We have just got to
manage the business, and there are opportunities."
co-founding the firm in 1983, Gilbert has made more than a
dozen acquisitions including some during difficult times.
Perhaps the most notable was in the wake of the split-cap
miss-selling scandal in the early 2000s when it emerged from an
existential threat to purchase the underperforming old Deutsche
Asset Management (DeAM) business. It was a hugely successful
move, against the odds achieving high levels of investor
retention and giving Aberdeen back its "fighting weight", as it
was described in the cover story of Global Investor back in
has been a long string of deals since (including Credit Suisse
and RBS businesses as well as Scottish Widows) that led to it
becoming the second largest Scottish asset manager, behind
Standard Life. It bought largely unloved business and
consolidated their funds into Aberdeen, leaving Gilbert
undisputedly in the hot-seat of a firm unified by a strong