LSE ready to offload fund business
Aberdeen tipped to join £900m bids for Russell Investment Management
Analysts at Numis, who base their “speculative” views on comments on strategy made by Aberdeen last week, say there would be some logic in it acquiring the business.
London Stock Exchange Group wants to offload the asset management business that it acquired when it paid £1.8 billion for equity index provider Russell Investments last June.
It issued a statement after the market closed last night that it had received a number of expressions of interest in Russell IM which has $260 billion (£170bn) under management. Analysts believe a rival or private equity company are the most likely bidders and that it could fetch between £650 million and £900m.
Numis said in a note to clients that a potential buy would represent a further opportunity for Aberdeen, led by chief executive Martin Gilbert (pictured) to diversify its business, following its £550m acquisition of Scottish Widows Investment Partnership last year.
“Additionally, Aberdeen management (for better or worse) have made it widely known they want to diversify the business away from its reliance on EM and related equities, which this deal would do. They have also said that the US is a market they want to expand into,” they said.
“It is a speculative view based on us piecing together various bits of information and clearly it might not happen, but we can nonetheless see logic as to why management might consider it.”
While admitting that their view is “speculative”, the note said investors in FTSE 100-listed Aberdeen “should be aware this deal is a possibility”.
The note added: “Aberdeen as a known (and successful in our view) cost cutter could therefore possibly add value. In our view, they would need to extract a 30%+ margin to make it value enhancing at a price of $1.4bn.”