Standard Life’s private equity assets will increase fourfold after it acquires Aberdeen Asset Management in a deal that creates the UK’s largest asset manager.
The Edinburgh-headquartered investment firm will pay around £3.8 billion ($4.7 billion; €4.4 billion) for Aberdeen’s existing issued ordinary shares in an all-share-deal, according to a joint statement issued by the firms on Monday.
“We have always been clear that it is Standard Life’s ambition to become a world-class investment company and that this would be achieved through continued investment in diversification and growth, coupled with a sharp focus on financial discipline,” Keith Skeoch, Standard Life’s chief executive, said.
The deal will deliver a “compelling and comprehensive product offering for clients covering developed and emerging market equities and fixed income, multi-asset, real estate and alternatives,” the statement read.
The combined group will operate under branding drawn from the Standard Life Group and the Aberdeen Group and be headquartered in Scotland. Its chief executives – Martin Gilbert from Aberdeen and Keith Skeoch from Standard Life – will be co-bosses of the new group.
Standard Life had £357 billion in assets under administration at the start of this year.
About 7 percent of Aberdeen’s £303 billion in assets under management are in private equity. Combined with Standard Life’s approximately £6 billion, the combined group will have around £28 billion focused on the asset class, according to an investor presentation outlining details of the deal.
The firm has about $32 billion in alternatives assets.
The majority of Standard Life’s private equity assets are held in its SL Capital Partners business, an Edinburgh-based fund of funds that is 60 percent owned by Standard Life and 40 percent by executives from the unit.
SL Capital makes private equity and infrastructure investments through primary and secondaries vehicles, and has raised more than half the $400 million target for its latest secondaries vehicle, SL Capital SOF III, according to PEI data.
Aberdeen has been expanding internationally and most recently opened an office in Dubai, its first in the Middle East. The firm has around 50 professionals in its private equity team and is preparing to ramp up its secondaries business in anticipation of an uptick in deals fuelled by macroeconomic volatility, as Private Equity International reported in August.
The deal will also create one of Europe’s largest core property investors – Standard Life’s investment division has around £16 billion of assets in direct real estate, public listed real estate and real estate debt, including its £2.5 billion core, open-ended UK Real Estate Fund, and operates with a team of 158 real estate investment professionals, based in Edinburgh, London, Paris, Boston and Hong Kong.
Aberdeen is also active in private equity real estate: its property unit had raised around $215 million between November 2016 and January 2017, including an undisclosed amount for secondaries in the asset class.
Monday’s announced acquisition values each Aberdeen share at 286.5 pence and following completion, Aberdeen shareholders will own around 33.3 percent, with Standard Life shareholders owning approximately 66.7 percent of the combined group on a diluted basis.
The deal comes amid a wave of consolidation among alternatives investment firms. On Friday, European alternatives manager LGT Capital Partners announced it had acquired private debt specialist European Capital, and in February Unigestion said it would acquire Swiss fund of funds Akina Partners in a deal that will almost double the global asset manager’s private equity assets under management to $6 billion.
– Thomas Duffell contributed to this report.