Aberdeen buys local DeAM business

Aberdeen Asset Management has indicated there could be further bulking up of its Australian equities and fixed income operations just moments after announcing it had purchased 26 per cent of Deutsche Australia’s asset management business for AU$148 million.

Aberdeen Asset Management’s head of equities Hugh Young said the purchase marked an extremely important and vital strategic deal on the fixed income side, and fills the gap left by Aberdeen 18 months ago with the Deutsche fixed income team they acquired in London and Philadelphia.

“Elsewhere on the equity side and distribution side, we’ll be adding some very valuable resources and bulking up already existing successful operations which we’ve been running here under a full service operation in Sydney for the last five years or so,” Young said.

Aberdeen Asset Management’s operations manager Charlie Macrae said the deal significantly enhances Aberdeen’s presence “in not only mature, but growing institutional asset management sectors”.

Commenting on how the group plans to combine Deutsche’s products into the Aberdeen fold, Macrae said while the group already has denominated assets and equity and fixed income in its unit trust range in the marketplace “there’s a lot to look at, but realistically, Aberdeen’s offerings in that space have been pretty small to date”. “And this transaction has the capability to significantly enhance our presence in the Aussie equity and the Aussie fixed income space.”

When questioned on distribution processes, Macrae said: “It will be internal, but again, some of the decisions are still to be taken.”

The deal will see Deutsche will retain 74 per cent of its current domestic asset management operation that translates to around A$27 billion in funds under management.

Commenting on the deal from Deutsche Asset Management’s perspective, chief investment officer Andrew Fay said: “What we want to do is focus on our strengths, which are alternatives and global product, and global insurance. This deal effectively allows us to accelerate those expansion plans … and what we’re already on track for is the launch of a number of structured products going forward, and that’s where we see that we have a comparative advantage over a lot of domestic players in the marketplace, as well as over the smaller firms.”

Fay flagged the launch of a BRIC (Brazil, Russia, India, China) structured product and a global infrastructure offering in the near future.

In response to the announcement, ratings house Standard & Poor’s has placed the funds involved ‘on hold’, those funds being the Deutsche Australian Equities Alpha Fund, Australian Small Companies Fund, Cash Plus Fund and Australian Fixed Interest Fund.