AUSTRALIA - Aberdeen Asset Management has agreed to acquire Deutsche Australia's failing Australian fund management businesses (the "Australian Target Businesses") for A$148m (£61m).
The Australian Target Businesses comprise an Australian equity and fixed income and money market unit trust business with A$3.5bn in assets under management (AuM), an equity segregated mandate business with A$3.2bn in AuM, a fixed income and money market segregated mandate business with A$2.8bn in AuM, and an insurance sub-advised mandate business with A$4.5bn in AuM.
The Australian Target Businesses generated revenues of A$30.7m in the year to 31 December 2006. Under Deutsche Bank’s ownership these businesses made losses before tax of A$3.7m in the year to 31 December 2006.
Aberdeen expects to operate the Australian Target Businesses from a reduced cost base. The Australian Target Businesses are anticipated to have gross assets of A$12.0m as at completion.
The benefits for Aberdeen include an increased Australian presence as well as the generation of value for its shareholders by eliminating overlapping costs and increasing regional integration. The acquisition is not expected to have an impact on Aberdeen’s earnings per share.
Aberdeen chief executive Martin Gilbert said: “The institutional market is growing at a phenomenal rate given its relative maturity.
"While we have seen good organic growth in specialist funds, we realise that to be an effective mainstream manager we have to have more of a local product manufacturing capability, which is what we now gain. The assets we are acquiring will deliver benefits in precisely those areas we lack.”
Aberdeen completed a similar transaction with Deutsche Bank AG (“Deutsche Bank”) in 2005 when it acquired fund management businesses in London and Philadelphia, then managing £46.3bn.
As then, the acquisition will see the incumbent fixed income and money market teams, led by Bill Bovingdon, join the Aberdeen Group to continue to manage their clients’ assets.
The acquisition is subject to customary regulatory approvals and is expected to complete by 1 July 2007.
JPMorgan Cazenove is acting as financial adviser and broker to Aberdeen. The Australian equity mutual fund and segregated mandates will be managed by Aberdeen’s existing equities team based in Sydney, led by Mark Daniels. Aberdeen’s Australian business is headed by Charlie Macrae.
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