abrdn plc has announced that it has entered into an agreement to sell abrdn Capital, its discretionary fund management business, to LGT.
The sale is expected to complete in the second half of 2023, following satisfaction of certain conditions including receipt of customary regulatory approvals. The sale involves the transfer of approximately GBP6.1 billion in assets under management and approximately 140 employees. The agreed purchase price to be paid at completion is GBP140 million, subject to certain adjustments, principally reflecting activity in the period to completion.
In order to succeed in the longer term in the DFM market, abrdn’s view is that this part of the business would need to build much greater scale. With abrdn’s strategy for its Personal vector focused on integrating the high-tech, high-touch model of interactive investor (“ii”) with financial planning, abrdn has concluded that another owner would be better placed to invest to deliver greater scale in the DFM business.
abrdn’s Managed Portfolio Service (“MPS”) business, which is currently part of the DFM business, is better aligned to its group strategy and will be carved out and retained prior to completion of the transaction, the firm says. abrdn views MPS as an important growth channel that aligns well to the way that the UK personal investment market is developing. The MPS team will be moved to sit within abrdn’s Adviser vector in order to maximise opportunities available through that business’ distribution model.
Stephen Bird, abrdn CEO, says: “We are establishing one of the UK’s leading personal wealth businesses, and this deal represents an important step forward in our strategy to focus on our high-growth, platform-led, businesses.
“Our track record over the past two years shows that where we identify non-core capabilities, we will look to divest and redeploy capital in ways that better align with the interests of our investors, clients and customers.
“The decision to sell our DFM business underlines our commitment to that principle.”
Richard Wilson, CEO Personal, adds: “DFM is a high quality, profitable business with a strong client focus and a brilliant team. However, in line with the way the market is moving, it needs greater scale and will be a better fit for LGT.
“Within abrdn’s Personal vector, our strategy for growth is focused on integrating the services of ii with financial planning services for our customers.”
Noel Butwell, CEO Adviser, says: “The Adviser vector is a natural home for our MPS colleagues, and we look forward to welcoming them. We’ll continue to invest in our MPS solutions and build on the successes that the team has had to date.
“The prospects for MPS solutions look positive with almost half of wealth managers expecting to use these solutions more extensively in the near term and we are confident that our skills, expertise and track record will deliver real results and help our UK adviser clients serve their customers better and grow their businesses.
“Our focus on serving advisers in the UK means we are committed to making it easier to work with us. Advisers will see a greater alignment of our technology and investment solutions to support them in meeting the needs of their clients.”
The business being sold to LGT delivered c.GBP40 million in revenue in 2022, and currently serves around 4,000 clients. Evercore acted as financial adviser to abrdn in relation to the transaction.