Aberdeen adds DB fund management divisions

Aberdeen Asset Management is to acquire several of Deutsche Bank’s fund management businesses, including DWS Investments UK.

The deal includes the British asset management and Philadelphia fixed income divisions of Deutsche Bank. Assets under management of the target businesses at May 31 totalled 46.3bn.

The initial cash consideration is expected to be 200m, but will include further deferred payments of up to 45m based on management fees at June 30, 2006. A payment equating to how much the net asset value of the target businesses exceeds 35m at completion will also be made if applicable.

The DWS Oeic range comprises 26 funds with 1.8bn of assets under management. The combined assets of the new group’s open-ended funds will exceed 5.3bn, DWS claims.

Fund managers and the “client-facing” staff of the target businesses will be transferred to Aberdeen, according to the group.

Gary Marshall, Aberdeen’s head of sales and marketing, says: “It is our intention and desire to bring across as much of the fund management team as we can. We will have to focus on stabilising the outflows seen on Deutsche’s equity side.”

Marshall adds: “What DWS has done is to focus funds to retail markets. We see ourselves as a manufacturer, not a distributor of funds. We are not entering the retail market directly but are focused on professional investors.

“We will have to sit down and assess the fund range going forward, but from completion everything will come under the Aberdeen brand,” he says.

Mark Dampier, head of research at Hargreaves Lansdown, says: “There is a huge question mark surrounding what happens to the fund managers. I didn’t think Aberdeen was interested in the retail space. Every time you get a fund management merger you see staff being laid off.”

Aberdeen is financing the acquisition via a fully underwritten 215m rights issue. The deal is subject to approval from various parties including the Deutsche Bank supervisory board, Aberdeen shareholders and the Financial Services Authority. Aberdeen expects the acquisition to be completed on about September 30.

Aberdeen Asset Management’s share price closed up 23.5% last week, following the announcement.