Seal the deals

8 January 2010 By George Hay Follow @gfhay

Like its other recent deals, the fund manager s purchase of half of RBS s asset management business looks good value and makes strategic sense. But chief executive Martin Gilbert needs to show investors that topline growth is generating cash. That requires a period of stability.

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Aberdeen Asset Management is to pay almost 85 million pounds for half of Royal Bank of Scotland's asset management business, which has 27.6 billion pounds of assets under management.

The asset manager will finance the transaction, which is expected to be earnings enhancing in the first year, by placing around 84 million new ordinary shares at 10p per share, or 8.3 percent of Aberdeen's current share capital.

Aberdeen will gain 13.5 billion pounds of assets under management, which produce annual revenues of 22 million pounds and operating profit of approximately 10 million pounds. The assets mostly consist of RBS's fundoffund and multimanager businesses.

The products of the acquired businesses have mostly been sold through RBS Wealth Management, which gives access to the client base of Coutts, the private bank. Aberdeen will have access to this distribution channel for a minimum of five years.

Aberdeen shares fell 3.7 percent to 133p on Jan. 8.

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