As I See it
Standard Life Aberdeen: a merger still in progress
The combination of Standard Life and Aberdeen Asset Management created the largest active fund manager in the UK with £655 billion under management.
The deal was brokered by their respective chief executives Martin Gilbert and Keith Skeoch but doubts over its forecasts are reflected in its share price dropping by about 14% since the deal completed.
In the year since the tie-up was announced the company has lost some of its most high profile managers. David Cumming, head of UK Equities joined Aviva Investors (and is returning to Edinburgh with his new employer). Aberdeen’s Martyn Gilbey joined Franklin Templeton as its UK country head and global product development head Jeremy Soutter left Standard Life Investments in January to join Carne.
Curiosly, although the “merger” was effectively a takeover of Aberdeen by Standard Life, some believe the Aberdeen team is now driving the business, particularly with the new company’s focus on emerging markets.
There are reports from within that progress is slow, not least the target of achieving 800 job reductions and £200m of savings, now increased to £250m over three years.
The company denies this and well-placed sources say it is on track to achieve all its targets.
Yet the company’s growth is stuttering. Outflows from Standard Life Investments’ flagship Global Absolute Return Strategies have been a standout, with the fund losing £10.7bn during 2017, against £4.3bn the previous year.
The sale of the insurance business to Phoenix and the spat with Lloyds which pulled the £109 billion Scottish Widows mandate have raised further questions.
One senior figure said the company is confident of retaining the Widows business, particularly after the sale of the insurance division which was a big issue for Lloyds.
Meanwhile, Gilbert and Skeoch received big bonuses on top of pay packages worth £4.3m last year. The remuneration was defended as a reward for pulling the merger together, while others said it was out of keeping with the company’s declining value to shareholders.
Attention has now turned to what the co-CEOs will do with the £3.2bn received from Phoenix, which could help focus the new company on its preferred fund management business.
The best bet is one last big acquisition before one or both hand the joint reins to a single CEO, or find themselves fighting off a predator which sees it as a useful addition to its own growth plans.