ABERDEEN Asset Management is poised to sign a £500m deal to buy Scottish Widows Investment Partnership (Swip) after beating a rival bidder to land the company.
The all share deal – which would give Lloyds just under a 10 per cent stake in Aberdeen – is set to be unveiled this morning after the other bidder for the company, Australian firm Macquarie, dropped out of the running.
Macquarie had previously tried to raise its bid closer to £600m in cash.
“It’s clear Lloyds feels shares would be more valuable than cash, a stake of up to 10 per cent counts as capital and helps with the capital ratio,” a person close to the deal said yesterday.
The deal will make Aberdeen, led by chief executive Martin Gilbert, the biggest independent asset management firm in Europe and the sixth biggest in the world.
It will also open the fund manager up to Lloyds’ massive distribution network to sell its funds.
In return, Lloyds will get a significant stake in the fast-growing business, making it a top five shareholder. The Swip brand will cease to exist once the acquisition is completed. Swip’s London staff are also expected to merge into Aberdeen’s offices.
Despite reportedly upping its bid to around £600m, Macquarie lost out in the deal after Lloyds decided it preferred Aberdeen’s stronger UK presence. Although not as pivotal as Aberdeen’s 2007 buy of Deutsche Bank’s fund management arm, the acquisition is likely to help diversify Aberdeen’s offering away from emerging markets, which have seen a slowdown this year.
Aberdeen confirmed last month it was in talks with Lloyds about buying Swip, which manages £145bn. Gilbert had previously said he was not interested in buying the unit after it was put for sale in the summer with a mooted £800m price tag.
Analysts have been divided on the merits of the buy. Barclays has backed it while broker Numis questioned it.
Aberdeen, Lloyds and Macquarie declined to comment
ADVISERS JP MORGAN
ABERDEEN recruited JP Morgan to act as advisers on the Scottish Widows Investment Partnership deal, while Lloyds obtained the services of Deutsche Bank.
Leading the deal team from JP Morgan is the bank’s co-head of investment banking Conor Hillery. Hillery was given the task of co-heading the unit in June – alongside Ina De – after being promoted from his role as head of JPM’s UK financial institutions group, taking over from Laurence Hollingworth.
Hillery, who studied at University College Dublin (UCD), started his financial career in the Irish capital with KPMG, where he trained as a chartered accountant.
He moved to London where he joined investment bank Dresdner Kleinwort Wasserstein before joining Cazenove in 2002.
The subsequent merger a year later with JP Morgan bought Hillery into the orbit of JPM’s Canary Wharf headquarters. He recently worked on the flotation of insurance firm esure and also helped broker Aberdeen’s acquisition of Artio Global Investors in February. He also helped advise on the acquisition of Cathedral Capital by Lancashire Holdings.