Fund firm not ruling out bid for New Star
Aberdeen boss hails own group’s growth but keeps an eye on troubled rival
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Fund manager Aberdeen Asset Management has not ruled itself out of bidding for troubled rival New Star Asset Management, whose shares have crashed after it revealed it was in fresh talks with bankers over its level of debt.
Aberdeen’s chief executive, Martin Gilbert, said: “We are not ruling ourselves in or out. We are watching what's happening.”
Mr Gilbert, a close personal friend of New Star founder and chairman John Duffield, said: “I have huge admiration for John. I really feel for him. His problem is not with the business but with its level of debt. If that can be solved there is a very, very good business.”
Aberdeen’s finance director Bill Rattray said: “Any time something is for sale we are naturally linked to it.”
New Star Asset Management’s shares shed about 43% of their value yesterday at 7.99p after it asked for a temporary suspension of its shares until negotiations with banks had been concluded. The request was rejected by listing authorities.
Shares at one stage dropped by 73% after it said it was in advanced and constructive discussions with its banking syndicate.
Speculation has focused on the possibility that New Star is negotiating a debt-for-equity swap.
The group has been hit hard by the financial crisis as worried investors have rushed to withdraw their capital.
Its assets under management have plunged to about £14billion, down from more than £23billion last summer, with its net debts standing at about £240million.
Any deal would remove growing concern surrounding its outstanding bank debt, but would see the share price diluted if banks took equity.
Aberdeen reported a slight rise in pre-tax profits yesterday for the year to the end of September, up from £94.3million the year before to £95.1million. Assets under management rose year-on-year from £95.3billion to £111.1billion.
Mr Gilbert said: “Being in positive territory for the year is fantastic, but it is all about next year now.”
He added that he had targeted cost savings of at least a further £20million on top of £50million made last year.
He said: “We are very pleased that Aberdeen continued to grow during the past year despite the unprecedented market difficulty. Conditions in the asset-management industry are tough and will remain so for some time. We believe our group is better placed than ever to confront these challenges. We will continue to manage the business tightly but we also remain keen to take advantage of relevant growth opportunities that may emerge during this turbulent period.”
Mr Rattray said new business flows were still robust and Aberdeen was well placed to win further new business.
Also yesterday, Aberdeen’s non-executive chairman, Charles Irby, announced his retirement from the post after nine years. Roger Cornick, a director since 2004, will succeed him.
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