London: Royal Bank of Scotland (RBS) has agreed to sell non-core asset management businesses to fund firm Aberdeen as it attempts to recover from a bruising financial crisis.
Aberdeen Asset Management will pay £84.7 million ($135 million) to acquire fund of hedge fund and multi-management businesses from the 84% state-owned bank.
“This transaction represents another step in our plan to restructure RBS around its core customer franchises,” chief financial officer Bruce Van Saun said in a statement.
The transaction is expected to be completed by the end of the first quarter.
The deal is further evidence that RBS chief executive Stephen Hester is reversing the decade-long acquisition spree of his predecessor, Fred Goodwin, which ended with the biggest rescue bailout for any bank in the world.
RBS is also looking to sell its 51% stake in commodities joint venture RBS Sempra and together with its partner Sempra Energy has received bids from a trio of banks worth nearly $4 billion, according to sources.
Aberdeen is taking over £13.5 billion ($21.53 billion) worth of assets and will keep on the 65-strong RBS teams at the divisions.
The fund management company said it would place about 84 million new shares, representing about 8.3% of its current share capital to raise the full amount needed to take over the businesses in a 100% cash deal.
Aberdeen said it had also entered into a distribution agreement with RBS Wealth Management for a minimum of five years. The deal gives Aberdeen a sales route through RBS’ private client franchise, including RBS’s private banking arm Coutts in the United Kingdom.
“Our client base are the Coutts of this world, the family offices of this world,” Aberdeen CEO Martin Gilbert said.
The deal also makes good on a long search by Aberdeen for exposure to hedge funds, a sector that Gilbert reckons is once again appealing to investors.
“What happened last year was exceptional and I think the long term trend of investing in hedge funds is going to continue,” Gilbert told Reuters.
Analysts at Singer Capital Markets said they expected the deal, and particularly the Coutts link, to add about 2 to 3% to published earnings estimates.
Altium Securities said the transaction was “strategically important” for Aberdeen, while Noble said the valuation was “attractive”, but the scope for cost synergies looked limited.
Aberdeen said in a separate statement on Friday that it had assets totalling £144.1 billion at 31 December 2009. The figure was dampened by net outflows in the first quarter of 2.6 billion, which the company said had mostly come from lower margin products.
The shares were down 2.89% by 1052 GMT, RBS shares were up 0.50% while the FTSE 100 was flat.