The agreement between the two firms involves Aberdeen buying Deutsche’s institutional equity, fixed income, global equity, multi-assets and DWS retail business in the UK, and its Philadelphia-based active fixed income business. The deal, subject to regulatory approval, is valued at £265m (€385m). Client assets in the targeted businesses are believed to account for £46.3bn.
“In the UK they are buying businesses, and in doing so the mandates will automatically go with the company,” says Simon Eccles-Williams, managing director at Hawkpoint, the corporate finance advisory firm that worked with Deutsche during the process for selecting the right buyer.
“So unless the trustees of the pension fund say ‘we don’t want to go with Aberdeen’, they will go with it,” he said. “Something tells me that although they may lose some of the multi-asset business, I would expect the fixed income and the OEIC businesses to stay where they are,” added Mr Eccles-Williams.
In the US, on the other hand, the situation is different since the deal doesn’t involve buying businesses but acquiring assets. “Because it’s an assets sale, what they have to do is to get people to take a positive step to transfer their funds into the new arrangements. The Philadelphia group has such a strong record, and there is such a personal following of the top six managers that I’d amazed if they don’t get most of those.”
Mr Eccles-Williams commented that the selection process was long, involving more than 40 candidates including private equity firms and large financial institutions.
“I think that the reason why some people were interested was that they didn’t have a fixed income business. Others really wanted to have a London operation and for others, like Aberdeen, it was their quantum leap.”
Compared to some of the large organisations involved, Aberdeen’s smaller size and the clear commitment of its management, played to its advantage. “When you are dealing with large organisations, there are all sorts of interests they have to assess, and they cannot move with that speed,” he added.
Deutsche’s UK-based hedge fund and retail business and its Philadelphia-based high yield division are not part of the sale.
PG
