Aberdeen Asset Management is to add Deutsche Australia’s asset management (DeAM) Australian fixed income and Australian equities portfolios to its business, 16 months after acquiring most of the German bank’s London and Philadelphia-based asset management operations.
The $148 million purchase sees Deutsche shed its existing domestic money market and insurance sub-advised business together with the equities and fixed income operations. It provides Aberdeen with around $14 billion of additional assets under management.
The assets sold represent around 26 per cent of Deutsche’s fund management business, with the bank’s assets under management falling to around $26 billion.
“Aberdeen has basically been looking to buy our Australian business since the 2005 acquisition and we’ve been looking at the trends and this is the strategy of where we want to go to,” Deutsche Australia head Andrew Fay said.
“It’s not us getting out of institutional [business] but what we are focusing on is the distribution of global and alternative products.
“We see that financial planners and platforms are becoming more sophisticated and are requiring more specialist products, and we feel we can provide that.”
According to Fay, while the group’s focus is currently on alternatives, such as hedge funds and property, he wouldn’t rule out a future move back into the Australian equities and fixed income space.
Under Deutsche Bank’s ownership, these businesses made losses before tax of $3.7 million in the year to 31 December 2006.
Aberdeen head of equities Hugh Young said this is an extremely important and strategic deal for the group.
“We will be adding some very valuable resources and baulking up our already successful existing operation,” Young said.
According to Aberdeen operations manager Charlie Macrae, the transaction significantly enhances Aberdeen’s presence in what is already a mature but growing institutional asset management sector.
Deutsche will retain domestic property securities, gold and precious metals equities and Australian infrastructure equities.
The acquisition will see the incumbent fixed income and money markets teams, led by Bill Bovingdon, join Aberdeen.
The Australian equity mutual fund and segregated mandate businesses will be managed by Aberdeen’s existing Sydney-based equities team, led by Mark Daniels.
Aberdeen began operations in Australia following the acquisition of a local funds management company Equitilink in December 2000.
In 2005, Aberdeen bought Deutsche’s UK and Philadelphia fund management businesses, which were managing $111.3 billion.
