Virgin deal helps Standard Life Aberdeen near £570bn mark

Aberdeen Standard Investments ‘cheap even for a struggling asset manager’

SLA

Standard Life Aberdeen has revealed in an unscheduled Q1 update that assets have reached £568.9bn as its joint venture with Virgin Money helps offset net outflows.

Assets under management and administration (AUMA) increased 3.2% over the quarter despite redemptions, which were not quantified in the regulatory filing.

The update said outflows “continued to be concentrated in a small number of strategies”.

The unscheduled update coincides with the asset manager’s AGM in Edinburgh today. Standard Life Aberdeen will detail net flows figures in its half-year results for the six months to 30 June 2019 in early August.

Numis Securities analyst David McCann said Aberdeen Standard Investments looked “cheap even for a struggling asset manager” at about 3x FY20 P/E where “there is a lot of pain already in the ‘E'”.

McCann said the earlier than expected impact of the Virgin Money joint venture meant the AUMA update was ahead of its estimate of £561bn for the period end. It had forecast AUMA to rise 1.7% over the period. The acquisition of Asia-based real estate manager Orion Partners added a further £700m to AUMA.

The deal, which is dominated by the £2.8bn Virgin FTSE All Share fund, was first announced in March 2018. In January, Aberdeen Standard Investments signed a conditional agreement for the sale of 50% of Virgin Money Unit Trust Managers with its high street bank parent and agreed the key terms of the JV. Several weeks later charges on the tracker were chopped from 1% to 0.60%.

The deal is due to complete in Q3 this year the update said.

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