Deals

Aberdeen Asset Management PLC Completes Acquisition Of Scottish Widows Investment Partnership Group Limited

Posted: 18th November 2013 08:29
The Transaction

Aberdeen Asset Management PLC ("Aberdeen" or the "Group") announces that it has entered into a definitive agreement to form a long-term strategic relationship with Lloyds Banking Group plc ("Lloyds"), as part of which Aberdeen will acquire Scottish Widows Investment Partnership Group Limited ("SWIP") and SWIP's related private equity and infrastructure fund management businesses ("the Acquired Business") ("the Acquisition" and, together with the long-term strategic relationship with Lloyds, the "Transaction"). The Transaction is subject to certain regulatory approvals. The Acquired Business includes the Investment Solutions division of SWIP which is a separate investment group that is responsible for the design, development and management of investment solutions for Lloyds' wealth clients. The strategic relationship will operate across Lloyds' Wealth, Insurance, Commercial Banking and Retail businesses and is expected to result in a stronger asset management offering for customers.
 
The consideration for the Acquisition of approximately £550 million (calculated by reference to an Aberdeen share price of 420 pence per share) will be satisfied by the issue of 131.8 million new Aberdeen shares to Lloyds, equivalent to an approximately 9.9% stake in the Group following completion of the Acquisition (referred to as the "Enlarged Group"). In addition, there will be a performance-related five year earn-out payment of up to £100 million dependent on growth delivered by the strategic relationship with Lloyds in the Investment Solutions business. The Acquired Business will add approximately £136 billion of assets under management ("AuM") with annualised revenues of approximately £234 million to the Group.
 
Transaction Highlights

Diversified business profile

  • Combination with SWIP improves the Group's balance of AuM and revenue across asset classes
  • Provides new investment capabilities for Aberdeen's global distribution team
Long-term strategic relationship with Lloyds

  • Formation of a comprehensive strategic relationship across Lloyds Wealth, Insurance, Commercial Bank and Retail businesses
  • Exclusive long-term relationship with Lloyds Wealth through Investment Solutions
  • Long-term contract to manage Lloyds Insurance funds
  • Introducer agreement with Lloyds Commercial Bank and distribution opportunities with Lloyds Retail business
Scale and financial strength

  • Acquisition adds breadth and depth to Aberdeen's existing product offering and enhances the Group's position as a leading independent global asset manager
  • Acquisition elevates Aberdeen to a top five position (by AuM) in the UK retail market, an area of strategic focus
Complementary product capabilities

  • The combination of Aberdeen and SWIP's strengths are expected to result in a stronger asset management offering for customers
  • SWIP strengthens Aberdeen's existing offering in fixed income and property
  • Acquisition of Investment Solutions transforms Aberdeen's ability to offer fiduciary management and strengthens asset allocation, multi-asset and multi-manager capabilities
Value creation

  • Acquisition expected to be materially enhancing to underlying earnings per share in first full financial year following completion
  • Acquired business anticipated to run at a marginal operating margin of 55%
  • Reinforces the Aberdeen Board's commitment to a progressive dividend policy and the ability to return surplus capital over time
Commenting on the Transaction, Martin Gilbert, Chief Executive of Aberdeen Asset Management said:

"This transaction is significant for the long-term prospects of Aberdeen in a number of ways. It strengthens our investment capabilities and adds new distribution channels; the acquisition of SWIP adds scale to our business across a range of asset classes; and it also introduces a strategic relationship with Lloyds Banking Group. We are confident that this transaction will deliver considerable additional value to our expanded client base and this will therefore benefit our shareholders.  I am delighted to welcome Lloyds as a major shareholder in the Aberdeen group and we look forward to working with them to deliver value through this new strategic relationship."
 

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