RBS to sell unit to Aberdeen for £85m
Royal Bank of Scotland Group, Britain’s biggest government-controlled bank, agreed to sell part of its fund management unit to Aberdeen Asset Management Plc for £85m (€95m).
The sale, which includes the Investment Strategies division with £13.5bn of assets under management, is expected to complete in the first quarter, the Edinburgh-based bank said today in a statement. Aberdeen will seek to sell £84m new shares to pay for the cash acquisition, the company said in a separate statement.
RBS Chief Executive Officer Stephen Hester is selling assets as part of a plan to overhaul the bank, which posted the biggest loss in British corporate history in 2008.
The takeover is Aberdeen CEO Martin Gilbert’s biggest since he acquired part of Credit Suisse Group AG’s funds unit for £298m in December 2008.
“This transaction represents another step in our plan to restructure RBS around its core customer franchises,” said RBS Chief Financial Officer Bruce Van Saun in the statement.
RBS is also being forced to sell assets to comply with state-aid rules, after receiving a £45.5bn government bailout. The bank is shedding branches, its insurance division and has received three bids for its stake in Sempra Commodities, according to a person familiar with the situation.
“This is not a typical Gilbert deal where he buys something and increases earnings by 20pc,” said Steve Keeling, an analyst at Singer Capital Markets Ltd. in London, which has a “fairly valued” rating on the stock. “But for Aberdeen it is about buying distribution and getting some scale in assets in high-net worth areas. It’s very sensible.”
“It’s an excellent deal for Aberdeen at a good price,” Gilbert said on a conference call for journalists today. “The outlook is very positive” following a “pretty tough 2008,” said Gilbert referring the acquired division.
The acquired unit had annual operating profit of £10m and revenue of £22m, Aberdeen said.
RBS and Aberdeen have also entered a five-year distribution agreement to sell products through RBS’s private banking division, the statement said. The agreement represents “significant opportunities” for Aberdeen, Gilbert said.
Aberdeen’s assets under management declined to £144.1bn at the end of 2009, from £146.2bn at the end of the third quarter, the company said.
The shares declined 3.3pc to 134 pence at 8:37am in London trading, to give a market value of £1.36bn. RBS rose 1.4pc to 36.37 pence a share.