AAM in groundbreaking deal with Japanese banking giant Mitsubishi

ABERDEEN Asset Management unveiled a bold move into the potentially lucrative Japanese market yesterday, signing a deal with the country's largest bank – which will take a 10 per cent stake in the Scottish company.

Under the agreement, Mitsubishi UFJ Trust and Banking Corporation (MUTB), the trust banking business of Mitsubishi UFJ Financial, will market and sell Aberdeen's international products to its institutional investors.

Last night AAM, whose chief executive, Martin Gilbert, has turned it into one of Scotland's most successful financial companies, said it was looking to secure a proportion of $30 billion worth of investment business in Japan.

More than a year in the making, the deal will give AAM access to MUTB's clients, for whom it manages more than $245bn in assets.

AAM will not receive an immediate cash boost from the deal. The 9.9 per cent stake in the company bought by the Japanese bank yesterday comes entirely from existing shareholders.

While the price was not disclosed, the market value of the stake is about £94 million.

Shares in Aberdeen were trading as much as 9 per cent higher yesterday and closed up 5.5p at 132p.

AAM finance director Bill Rattray said: "This is a fairly key addition to our strategy. It is very difficult as a western company to break in (to Japan] on our own, but we've been pretty keen to find the best way to distribute into Japan for quite a while."

He added: "The Japanese investment market is something like a $3 trillion market. Even if investors were to put an extra 1 per cent into international stocks that's $30bn for us to try to get a good share of."

Initially targeting pension funds with three of Aberdeen's international equities and fixed-income fund products, the alliance may later be extended to other products or sales to retail investors.

Cazenove analyst Rae Maile said the deal "marks a new stage in Aberdeen's development as a truly global asset manager".

While MUTB, like most Japanese investment companies, has shown a cautious approach to investing internationally, it has signalled an intention to grow outside its domestic market, offering its customers a full range of services.

Under the terms of the AAM deal, MUTB has agreed not to increase its stake in the company beyond 19.9 per cent for at least two years.

If it increases its stake to more than 15 per cent it will have the right to appoint a non-executive director to the AAM board.

MUTB also has non-dilution rights, meaning if AAM goes to the market to raise cash it must offer new shares to MUTB at least in proportion to its holdings.

BACKGROUND

MITSUBISHI UFJ Trust and Banking Corporation (MUTB) is the trust banking business of Mitsubishi UFJ Financial Group, the Tokyo-headquartered financial giant.

It is Japan's largest banks and has links to Thomas Blake Glover, the "Scottish samurai" who was a key figure in the industrialisation of Japan. MUTB is one of the largest asset management companies in Japan, managing assets worth about $245 billion, for mainly institutional investors. The deal marks a desire by MUTB, well versed in its domestic market, to increase its international scope.

Late last month, its parent company announced that it would spend $9 billion buying 21 per cent of US investment bank Morgan Stanley.