The boss of Aberdeen Asset Management has said his firm is ‘extremely unlikely’ to bid for troubled investment rival Gartmore despite a surge in profits.
Chief executive Martin Gilbert said organic growth was Aberdeen’s main priority although he recognised there was an opportunity to bid for Gartmore, which has seen its share price halve after star European fund manager .
Gilbert said: ‘You never officially rule anything out as things can come back to haunt you. We are extremely unlikely to be buying Gartmore and I think Gartmore’s strong preference is to keep the business intact and merge with someone smaller than us, probably one of our listed rivals.
‘I know [Gartmore chief executive] Jeff Meyer well and we know the business reasonably well, but the problem is their model does not fit our structure. We are team-based and they are more star manager, which is more akin to a Jupiter or Henderson,’ Gilbert added.
Gilbert was speaking after revealing that Aberdeen’s pre-tax profits had soared to £125.6 million from £10.5 million in the 12 months to the end of September. Assets under management jumped £32.5 billion to £178.7 billion with inflows of money leaping 144% to £46.6 billion. A final dividend of 3.8p per share has been declared, making a total payment for the year of 7p per share, up 17% on the previous year.
The results are confirmation of Aberdeen’s successful fight back from the brink at the start of the century when its business was threatened by the fall out from the scandal over split capital investment trusts, of which it was a key provider.
The firm said it had seen particularly strong demand for its global emerging markets, global equity and Asia Pacific funds, but also noted growing interest in emerging market debt, which attracted some £300 million over the year, Asian fixed income and US equities.
Aberdeen has a strong franchise in emerging markets where its fund managers Hugh Young and Devan Kaloo are well followed by investors. Both managers are represented in Citywire Selection, our list of recommended investments.
Over the year the firm strengthened its balance sheet by reducing borrowing to 0.6% from 17% in 2009. ‘We believe that fund management companies like ourselves need to be strongly capitalised in volatile markets,’ Gilbert said.
By 12.30pm its shares had firmed slightly to 179.4p. They have risen from a 12-month low of 111p in February.
JP Morgan Cazenove maintained its ‘overweight’ recommendation with analyst Rae Maile saying the stock traded at a 10% discount compared to its rivals.