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Aberdeen Asset Management to acquire RBS ‘fund of funds’ business

FTSE250 listed investment group Aberdeen Asset Management (LSE: ADN) agreed to acquire certain fund management assets of the government supported UK bank, the Royal Bank of Scotland (LSE: RBS). Under the terms of the deal, Aberdeen will pay £84.7 million for an established ‘funds of funds’ business. In a separate statement, the asset management group also revealed a strong first quarter.

The proposed deal covers RBS’s ‘fund of funds’ management businesses covering long-only multi-manager funds and certain private equity and real estate ‘funds of funds’. RBS had announced plans to divest the business early in 2009.

"Aberdeen has been looking for some time to establish a high quality platform in the alternatives arena, and this exactly fits our requirements”, Aberdeen chief executive Martin Gilbert said, "The addition of this leading multi-manager and specialist alternatives resource will significantly strengthen our existing multi-asset and multi-manager capability.”

To finance the cash deal, Aberdeen also intends to raise £84.7 million through a placing of 84million new ordinary shares, representing 8.3% of the company’s current issued share capital.

The asset management group separately revealed a strong Q1 performance in its interim management statement, according to Aberdeen its first quarter has seen global markets continue in a more settled vein, which emerged from mid-2009.

In the three months ended 31st December 2009, the FTSE250 constituent substantially improved its gross new business wins with £9.6 billion, compared to £2.6 billion in the comparative period in 2008. “We have continued to improve the mix of our business with strong inflows into our higher margin equities funds”, Martin Gilbert said.

Assets under management actually fell by 1.4% to £144.1 billion with a net outflow of £2.6 billion during the period, however Aberdeen said its ‘fee mix’ remained advantageous due to comparative fee rates, with a considerably higher inflow into equity funds against the outflows from fixed interest and money market products.

Aberdeen said it remains confident in its financial strength, its diversified product and client base, and although it is possible that the economic and market recovery may encounter some difficulty in the short term, the company will continue its profitable growth.

Disclosure: The author does not hold positions in the company