Standard Life (SL) and Aberdeen Asset Management’s £11bn merger is expected to prompt a flurry of fund management consolidation, industry experts said yesterday.
The companies’ share prices rocketed after they confirmed the terms of their deal, despite City uncertainty over plans for Keith Skeoch and Martin Gilbert to be co-chief executives.
SL’s shares closed up six per cent to 400p, while Aberdeen’s jumped four per cent to 298p. Rivals Jupiter and Ashmore also saw their shares jump.
City sources speculated that the deal could be challenged by a rival bid.
Coming shortly after Henderson and Janus agreed to merge, industry experts said they expect more deals in the industry.
SYZ Asset Management’s Mike Clements said:
It has been a long time coming, but the collective headwinds for the sector are proving too much to bear alone for many asset managers.
The relentless rise of ETFs, persistent fee pressure, struggling fund performance, rising regulatory and compliance costs and higher capital requirements are making life tough for stand-alone and sub-scale asset managers.
The need for scale has never been more apparent in a sector which is dominated by a few global giants, but has an incredibly long tail of smaller players.
Caroline Belcher, partner and co-head of financial services at Cavendish Corporate Finance, said:
The all-share deal is significant transaction, and we can expect it to stir up further consolidation in the asset management industry as smaller players look for strategic opportunities to fend off growing competition.
Goldman Sachs is advising SL on the deal, while JP Morgan and Credit Suisse are on the Aberdeen side.