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Funds News

Embattled Aberdeen manager Gilbert eyes five more years

LONDON (Reuters) - Aberdeen Asset Management’s chief plans to stay on for five more years even though investors have withdrawn money every quarter for nearly three years and its shares have almost halved in less than 12 months.

The fund manager co-founded in 1983 by Chief Executive Officer Martin Gilbert slipped into the second tier of London-listed stocks this week and the 60-year-old expects U.S. suitors to have the company in their sights now.

“Every investment banker in the world would probably have us on their list as the number one buying opportunity. I bet in America – because all the Americans want what we have – they’re going round saying ‘maybe you should buy Aberdeen’,” Gilbert told Reuters in an interview.

“What we’ve always said is being independent is a massive advantage to us and as long as our shareholders are willing to support us we’d rather stay independent,” he said.

After battling Schroders to become the biggest standalone British asset manager, emerging market weakness last year reduced Aberdeen’s assets by 12 percent to 283.7 billion pounds ($403 billion), lagging Schroders on 313.5 billion.

Some in the market have also questioned whether Gilbert can survive such persistent outflows, especially after an unusually high 35 percent of shareholders voted this year against Aberdeen’s executive pay packages.

“What I have said is that I will give the board at least two years notice before I step down so they have time to plan, and I haven’t told them that the two years has started,” Gilbert said.

“I’d like to go on another five years at least. I enjoy it. And when you have as much experience as I have, you don’t worry about things, and it is quite relaxing,” he said.

DIFFICULT TIME

Gilbert said while Aberdeen was going through a difficult time it was not as bad as 2002 when its shares lost 97 percent after an investigation into the sale to retail investors of higher-risk split capital funds, which eventually turned sour.

“This doesn’t even compare with splits, or anything like that,” he said.

“We still have a market cap of three billion and more than 500 million of cash. When we were deep in the splits crisis, we had a market cap of 50 million and debts of 250 million, and we were under investigation, so it’s completely different.”

Still, Gilbert does not expect the market environment to get better for some time, even though an emerging market bounce in March has put Aberdeen’s shares on course for their best performance in five months.

He said emerging markets weakness coupled with unexpectedly hefty withdrawals by some sovereign wealth funds in response to a falling oil price had exacerbated outflows, and those trends would probably continue before a turnaround later in the year.

For now, Gilbert said investors were more likely to use exchange traded funds (ETFs), given their greater flexibility to move in and out of such volatile markets.

“I expect flows ... have gone into ETFs, not us. If you’re going to make a quick bet on emerging markets, the best way to do it is pile into an ETF and then you can come out quickly.”

He said the sovereign wealth funds, however, would probably remain net sellers of bonds and stocks as long as oil, which is trading around $40 a barrel, remained below $60.

“I don’t suppose any of us saw that oil would go from $120 to below $30 quite so rapidly and some of the oil producers needed a higher oil price for their own budgets. So the outflows from sovereign wealth funds have surprised us.”

($1 = 0.7040 pounds)

Editing by David Clarke

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