Standard Life & Aberdeen Asset Management’s Merger

The collaboration of the two largest Scottish funds is something everyone is interested in hearing about. After the news broke over the weekend, it seems to be all people are talking about and is sure to be a talking point for years to come. There is a lot of discussion around the implications the merger may have on both the local and wider economic standing.

The merger will create Britain’s largest fund with over £660 billion worth of assets under management. Initial concerns have been raised in relation to potential redundancies as between the two institutions they currently employ over the 9,000 people. Early predictions have indicated that the rate of redundancy could be as high as 1/10, as quoted by business analysts. If this volume redundancy takes place, the availability of highly sought after Asset and Fund Managers will naturally increase and they may look to move locally which could result in the growth of more local property institutions. The opposing argument is of course that a brain drain effect may occur and see property people relocating, most likely down to London.

The two values of the funds have resulted in one-third ownership for Aberdeen Asset Management and two-thirds for Standard Life. The agreed value stands at £3.8 billion for Aberdeen Asset Management and £7.5 billion for Standard life, creating a mutual value of just under £11billion. It has been an interesting start to the week, many analysts and researchers thought Martin Gilbert was purely aiming his sights on an American investor, it has been quite obvious for some time that due to their exposure in the emerging markets a merger or takeover of some description was due to occur, however, this was most definitely unexpected!

The other talking point has been in the impressive share price rise for both funds in the aftermath of the weekend’s news. Aberdeen closed for the day on Monday (06/03/2017) at 303.01p, a 5.80% increase in the day. While the same also occurred in relation to Standard Life, their price closed at 399.96, a 5.76% increase in the day. The positivity appears to be spread throughout, Lloyds Banking Group – who currently own 10% of Aberdeen Asset Management – has stated their support of the merger. The initial positivity has caused the majority of news articles to put a positive spin on their headlines, something both Standard Life and Aberdeen Asset Management will need to continue to maintain customer confidence, as we all know, confidence is key!

As the news is still very fresh, we’re unsure of what new developments or plans will take place over the course of the next few months, and indeed year. However, it is an exciting time for both funds as they look to unite over ground they have previously competed for, for so many years!

Bradley Flatt, General Practice Surveying Consultant, Foundation Recruitment