Aberdeen UK's top asset manager after £250m Credit Suisse deal

ABERDEEN Asset Management yesterday became the UK's biggest publicly quoted fund manager by acquiring the asset management arm of Credit Suisse in a deal worth £250 million.

The deal involves the Swiss bank taking a 25 per cent stake in AAM, the fast-growing group run by chief executive Martin Gilbert.

AAM, which has £110 billion of assets under management, is acquiring a further £40bn of assets from Credit Suisse.

The company said yesterday the deal would enable it to achieve greater scale in its existing markets, including the UK, Australia, Germany, Switzerland and Japan. It said the deal added another "significant, long-term, quality shareholder".

Credit Suisse put its fund management arm up for sale earlier this year, and was known also to be in talks with Schroders.

Bill Rattray, AAM's finance director, yesterday revealed that the deal was signed in London yesterday morning at about 6am.

"I will go to bed at some stage. Maybe it will be this year or next year. I feel a bit tired but I feel quite good," Rattray told The Scotsman.

He said the Scottish group understood that it was important for Credit Suisse to get the deal finalised by the year-end. "We are delighted to be in a position to move quickly in these things," Rattray added.

He confirmed that Schroders was a rival bidder. "My understanding is it came down to the fact Shroders offered a cash consideration. We were offering a share consideration.

"The fact we are at a reasonably low point in the market at the moment, I suppose the attraction of a share offer is CS still retains some upside to regain the value."

AAM is to issue Credit Suisse a maximum of 240 million new ordinary shares, equivalent to 24.97 per cent of its share capital, and valued at £250m based on the closing price of its shares on Tuesday.

The Swiss bank said in a statement yesterday: "This agreement enables us to focus our resources on our alternative investments, asset allocation and Swiss business, where we have strong performance and critical mass."

The Scottish group said the actual number of shares to be issued to Credit Suisse will depend on the level of run-rate revenues delivered at the closing of the acquisition, which is anticipated to take place on end-June next year.

Rattray said AAM took no particular pride in now being the UK's biggest listed fund manager. He said: "We don't place any store on size for the sake of it.

"We are interested in growing the business profitably. We see it as an attractive opportunity.

"It will be significantly enhancing to our earnings, due to the fact there is a pretty attractive revenue stream coming from those assets and we are able to put it through an efficient cost base."

The business being acquired brings with it staff in the UK, Europe and Australasia. Those offices will merge with AAM offices in relevant areas.

Rattray said he did not want to talk in detail about staffing issues. "There are sensitivities. I prefer to stay silent," he said.

AAM acquired Deutsche Bank's fund management business in 2005. AAM's shares closed up 14.6 per cent, or 15.25p, at 119.5p yesterday.

FACT BOX

CREDIT Suisse is one of the world's banking leviathans.

Since June 2007, it has been forced to book writedowns of $14bn (£9.6bn) as a result of the credit crisis.

Like most other banks, it has conducted a strategic review of its operations.

As well as jettisoning fund management, Credit Suisse has swung the axe elsewhere.

Early in December it announced it was cutting 5,300 jobsmainly in investment banking, after making losses of three billion Swiss francs (£1.9bn) in the two months to end-November. That included 650 jobs in the UK, and brings the total of jobs lost for the year to 7,100. The bank is active in more than 50 countries, with a workforce of about 50,000.