LGT, the private banking and asset management group owned by the Princely Family of Liechtenstein, has reached an agreement with abrdn to acquire its discretionary fund management business in the UK and Jersey.
With this transaction, involving approximately £6.1bn in assets under management and close to 140 employees - around 45 of which are based in Scotland - LGT is aiming to strengthen its position in the UK wealth management market.
The abrdn Capital division encompasses a long-standing portfolio of high net-worth clients and charities.
Upon closing of the transaction, LGT Wealth Management will assume the client relationships of the acquired business and all of its employees, increasing its assets under management from around £22bn as at the end of January 2023 to more than £28bn.
In view of the integration of the additional staff, LGT Wealth Management plans to expand its existing locations in London, Edinburgh, Bristol and Jersey, while also increasing its UK footprint to take on the offices in Birmingham and Leeds currently operated by abrdn’s discretionary fund management business.
Ben Snee, chief executive of LGT Wealth Management, explained: “We see a strong strategic fit between abrdn’s discretionary fund management business and LGT, there is clear similarity in ethos and approach between the two businesses, with a genuine desire to provide first-class client solutions and passion for conviction-based investing.
“We very much look forward to welcoming our new colleagues to the team and are convinced that by combining our footprint and offerings, including abrdn’s proven experience in the charities sector, we’re set to achieve further successful growth in the UK market.”
Completion of the transaction, by way of a share deal, is expected in the second half of 2023, following receipt of customary regulatory approvals.
LGT’s offer values the business for acquisition at an amount of £140m.
Formerly known as Vestra Wealth, the firm was founded in 2008 and acquired by LGT in 2016. It currently employs more than 475 staff.
Prince Max von und zu Liechtenstein, the chairman of LGT, commented: “We very much look forward to welcoming abrdn’s discretionary fund management clients to LGT.
“The business’ strong investment performance and ESG strategy make it a perfect fit for LGT.
“We are convinced that, in turn, our stability, entrepreneurial spirit, focus on excellent client service and investment expertise, make us a reliable and attractive partner for our future clients.”
Stephen Bird, abrdn's chief executive, commented: “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.“
The business being sold to LGT delivered circa £40m in revenue in 2022, and currently serves around 4,000 clients.
Evercore acted as financial adviser to abrdn in relation to the transaction.
Separately, abrdn reported pre-tax losses for 2022, as investors withdrew £10.3bn from its funds in what Bird called “one of the hardest investing years in living memory”.
The Edinburgh-headquartered group's full year results showed a pre-tax loss of £615m, down from a profit of £1.1bn the year before, as net outflows from its funds rose from £3.2bn in 2021.
Assets under management also fell by 8% to £500bn, amid a turbulent period for global markets, with the acquisition of Interactive Investor helping to offset the fall.
“Almost all asset classes dropped in value as the cost of money soared to quell the rising tide of inflation,” Bird explained.
“The world in which we and our clients are operating today is radically different from the environment of the past decade.”
John Moore, senior investment manager at RBC Brewin Dolphin, commented: “abrdn’s results were always going to be messy after a period of huge changes at its businesses and volatile markets last year.
“While the numbers show a company in flux, the strategic plan continues to reshape the business – the sale of the discretionary fund management division and hollow-out of the managed portfolio service offer another step toward better scale and simplification.
“Stakes in Phoenix and HDFC Life Insurance, along with reducing the company’s overall share count, could be next up for consideration.”
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