Aberdeen Buys Credit Suisse’s Fund Management Arm

LONDON (Reuters) – Aberdeen Asset Management (ADN.L) will acquire Credit Suisse’s (CSGN.VX) fund management arm in an all-share deal valued at 250 million pounds ($363.3 million), boosting its funds under management by almost 50 percent and adding clout to its sales and distribution network.

Adding to earlier fourth-quarter losses, Credit Suisse said on Wednesday it would take a non-cash charge of about 600 million Swiss francs ($570.3 million) in the fourth quarter for goodwill related to the operations.

Aberdeen said the deal created the potential for “substantial” cost efficiencies, as well as “significant” earnings enhancement.

Chief Executive Martin Gilbert declined to give full details of cost cuts or future staffing levels in a conference call with journalists, however.

“The terms of the deal appear to be highly favorable to Aberdeen,” brokerage Daniel Stewart said in a note.

Aberdeen shares rose in the wake of the announcement, adding 10.7 pence or 10.3 percent to reach 115 pence at 5:11 a.m. EST. Credit Suisse shares were not traded on the Swiss stock exchange because of a holiday.

The Swiss bank will take a 25 percent stake in Aberdeen — which it has committed to hold for at least three years — as well as a seat on the board.

The deal will boost Aberdeen’s assets under management to about 150 billion pounds from 110 billion at present, making it the UK’s largest listed fund manager. It also gives the firm a much sought-after boost to its distribution network.

DISTRIBUTION BOOST

Aberdeen said that the Credit Suisse move will give it greater scale for sales of funds in its existing markets such as the UK, Australia, Germany, Switzerland, and Japan.

The deal covers the majority of Credit Suisse’s asset management businesses in Europe, the United States and Asia Pacific. Credit Suisse will retain its asset management franchise in Switzerland although management of a small number of Swiss funds will transfer to Aberdeen.

Credit Suisse will continue to operate its Global Investor business in Brazil and through joint ventures worldwide.

Aberdeen noted it will gain another “significant, long-term, quality shareholder.” British hedge fund Toscafund owns a stake of about 20 percent stake, and in October, Japan’s Mitsubishi UFJ Trust and Banking Corp took a 9.9 percent holding as part of Aberdeen’s bid to boost the distribution network.

“This fits our strategy of not increasing debt in current markets, and will actually have the effect of reducing our gearing,” Gilbert said during the call.

Media have reported that Aberdeen could buy up all or part of New Star (NSAM.L), the troubled British fund manager run by Gilbert’s friend John Duffield.

The Aberdeen boss did not comment on that speculation, but refused to rule out further deals.

“There is a lot of transaction to be done. I’ve been doing this for more than 20 years, and I’ve never seen an opportunity like this,” he said.

($1=.6881 Pound)

($1=1.052 Swiss Franc)

By Matt Scuffham and Joel Dimmock
(Additional reporting by Emma Thomasson; Editing by Hans Peters and David Cowell)