|Bid||312.30 x 0|
|Ask||312.40 x 0|
|Day's range||311.80 - 322.60|
|52-week range||231.05 - 338.25|
|Beta (5Y monthly)||1.23|
|PE ratio (TTM)||6.72|
|Earnings date||10 Mar 2020|
|Forward dividend & yield||0.22 (6.88%)|
|Ex-dividend date||15 Aug 2019|
|1y target est||380.07|
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(Bloomberg Opinion) -- It’s showtime for Keith Skeoch. Almost three years since he and Martin Gilbert agreed to create Standard Life Aberdeen Plc, he’s now flying solo as chief executive officer of the U.K.’s biggest standalone asset manager. For the fund behemoth to be valued by investors and analysts at more than the sum of its parts, it needs to either consistently outperform its benchmarks, or unlock the value of its captive assets — or, better yet, both. It won’t be easy. The storm engulfing the fund management industry has strengthened since Gilbert’s Aberdeen Asset Management and Skeoch’s Standard Life merged — and the difficulties of combining two different cultures have arguably deterred rivals from seeking similar tie-ups. Customers have withdrawn money in every single quarter since the merger was completed in August 2017, reducing assets under management to 577.5 billion pounds ($753 billion) at the mid-year point, from 670 billion pounds when the deal was completed .While Skeoch insists that doing the deal was still the right move, the company he oversees is now worth about 7.7 billion pounds, down from 13 billion pounds at the time of the merger.To be fair, the entire asset-management industry faces tough conditions. The relentless downward pressure on fees for managing other people’s money shows no signs of abating, while the need to invest in information technology has led to an expensive arms race. It’s so dire, according to PGIM CEO David Hunt, that as many as 80% of the industry’s players will become “zombie firms” as the disparity between winners and losers widens. Standard Life Aberdeen’s shares have rallied 28% this year. But that lags the gains of more than 50% posted by France’s Amundi SA, Europe’s biggest fund manager with 1.6 trillion euros ($1.8 trillion) of assets, and the 33% from Germany’s DWS Group GmbH, which oversees about 750 billion euros.With U.K. financial assets out of favor with investors for much of this year and domestic investors pulling money out of the stock market, the U.K. firm has fared worse than its competitors in Europe. But its lack of an exchange-traded funds business — DWS ranks second in Europe for ETFs, while Amundi lies fifth — has left Standard Life Aberdeen dependent on active management at a time when customers are shifting more and more money into low-cost passive investment products. It’s probably too late to build a passive business, while Skeoch’s view that the margins on those products are too low to be attractive makes buying a rival’s unit unlikely. So the firm remains a non-player in originating business in a market that Bloomberg Intelligence estimates has grown by more than 30% this year, reaching 884 billion euros in assets. Nevertheless, analysts see value in Standard Life Aberdeen, with nine saying its shares are worth buying, nine rating it a hold, with a single sell recommendation.For one thing, it has an unusually large number of stakes in other companies, certainly compared with its asset manager peers. It owns about 20% of Phoenix Group Holdings Plc after selling its insurance business in February 2018, as well as about 15% of HDFC Life Insurance Co. and 27% of HDFC Asset Management, both based in India. In total, those stakes are worth about 5 billion pounds.Analysts at UBS AG reckon a useful way to value those shareholdings is by calculating how much cash they have the potential to generate, which gives a lower value but still suggests that investors are undervaluing Standard Life Aberdeen’s core competency.The market capitalization numbers for Standard Life Aberdeen and the three companies it owns chunks of have moved a bit since UBS published that report last month. And, earlier this month, the company proposed raising as much as $380 million by reducing its stake in HDFC AM, as Skeoch makes good on his August promise to “unlock the value of the assets on the balance sheet.”But the basic premise remains true: The market is assigning a minimal value to Standard Life Aberdeen’s core business.The pace of asset sales has increased since the arrival of Douglas Flint, who’s been chairman since the start of this year. He was also instrumental in resolving the dual CEO structure: Gilbert told the Daily Mail that he decided to step down to avoid having Flint “tap me on the shoulder and say `come on, it’s time to go.’” He’ll quit the firm altogether next year.There may be worse to come on the assets front for Skeoch. Analysts at Numis Securities Ltd. estimate that net outflows for this year will approach 80 billion pounds with a further 38 billion pounds set to depart next year, leaving assets under management at 515 billion pounds by the end of 2020 — a far cry from the $1 trillion club that Gilbert was so keen to join. The key to retaining existing investor funds and luring more customers lies in generating outsize returns. On that front, the merger seems to have been a distraction. In 2018, only half of the firm’s funds were ahead of their benchmarks on a three-year basis. While that had improved to 65% by the middle of this year, just 53% outperformed on a one-year calculation, with 40% lagging their benchmarks over a five-year horizon. Skeoch, an economist by training, lacks the razzmatazz that Gilbert brought to the party. But his main priority in the coming year will be to galvanize his sales force to stanch those outflows and his portfolio managers to focus on beating the markets — otherwise he, too, may start to fear a tap on the shoulder.\--With assistance from Elaine He.To contact the author of this story: Mark Gilbert at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Rupert Hargreaves follows up on his Standard Life Aberdeen share price tip he put forward at the beginning of 2019.
A daily overview of the top business, market, and economic stories to watch in the UK, Europe, and abroad.
A FTSE 100 (INDEXFTSE:UKX) bargain and a pricey AIM stock were big winners in 2019, could they repeat the trick in 2020? Harvey Jones investigates.
UBS warns clients that other UK property funds could be gated after M&G Investments stopped withdrawals from a £2.5bn fund on Wednesday.
(Bloomberg Opinion) -- The list of challenges facing asset managers today is deja vu all over again from years past: downward pressure on fees, customers switching to low-cost passive products, and increased regulation. But now, one of the balms previously proposed to soothe the industry’s pains — achieving economies of scale by bulking up — seems to be falling out of favor.McKinsey & Co. this week published a report on the European asset management industry with the title “Adapting to a new normal.” As befits a document produced by one of the world’s leading management consultancies, the study is littered with gobbledygook phrases about the benefits of “alignment of clear value propositions;” the need for “proactive and bold actions;” the prospects for “unlocking vectors of new growth;” and the demands to “seek a new narrative.”But nowhere in the report, which runs to about 2,500 words, does McKinsey recommend mergers and acquisitions as providing a potential path to salvation.That’s new. In 2018, Bain & Co., which competes with McKinsey in selling strategic advice to companies, opined that medium-sized firms faced a “valley of death” in the coming half decade that would force them to seek refuge in size via M&A. In 2017, the Boston Consulting Group came to much the same conclusion, albeit with the caveat that “growth through acquisition is a winning formula only if it achieves or consolidates a winning business model.”The perceived shortcomings of the two big mergers seen in the global asset management industry have clearly prompted a rethink about consolidation among the industry’s leaders, as well as its hangers-on.Both of the new creations — Standard Life Aberdeen Plc and Janus Henderson Group Plc — have suffered big customer outflows in the quarters following their transformations. The difficulties of merging different cultures in businesses where the key assets walk out of the door at the end of the business day proved tougher than anticipated.“We should all be more nervous, more anxious and have a greater sense of urgency,” Michelle Seitz, who oversees about $300 billion as the chief executive officer of Russel Investments Group, said about the asset management industry last month. “I don’t believe M&A is a panacea. If you have two troubled companies, putting them together means that you have bigger problems than you did before.”The McKinsey report does make one reference to previous industry consolidation, but only in the context of pointing out the “sustained” fragmentation seen among asset managers in the past decade or so. It found that while funds at both the lower and upper ends of the spectrum have grown in average size, those in the middle have seen a decline in average assets to 294 billion euros ($323 billion) from 315 billion euros in 2007.McKinsey expects European asset managers to garner net new money of just 1.5% this year, better than last year’s 0.2% growth but just half of the expansion the industry enjoyed in 2017. And while assets under management will grow to 22 trillion euros from 20 trillion in 2018, the profit pool will remain static at 17.5 billion euros.Moreover, that dismal outlook is reflected globally, with worldwide industry growth in assets under management, inflows and profits all expected to slow in the next five years.Parsing the verbiage, the McKinsey prescriptions for remedying what ails asset managers are unsurprisingly commonplace. Improving customer service, adding more sustainable investing products and becoming more efficient in order to cut costs are universal panaceas, applicable to just about any industry.Meantime, the final recommendation the consultancy firm lists — “taking the lead in using distributed ledger technology” — smacks of desperation. The blockchain is widely derided as a solution in search of a problem. If that’s the most original idea the consultants have on offer, the future of the asset management industry is truly bleak.To contact the author of this story: Mark Gilbert at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Asset manager Standard Life Aberdeen could bring forward its plans for a new remuneration policy, it said on Thursday, after facing a rebellion over pay earlier this year. More than 40% of SLA shareholders voted against the company's pay report at its annual general meeting in May. SLA said this was due to concern about new chief financial officer Stephanie Bruce's pay. SLA itself frequently criticises the companies in which it invests for high executive pay.
(Bloomberg Opinion) -- European fund management companies spent 2018 watching their share prices steadily decline, battered by increased regulatory scrutiny, customers withdrawing money and the relentless squeezing of fees. They’ve rallied this year, but the industry’s biggest beast in the region is outpacing its peers by an astonishing margin.Investors in Amundi SA have enjoyed a total return of more than 60% in 2019, outpacing the Stoxx Europe 600 index by 35 percentage points. The stock has beaten the 32% gains at DWS Group GmbH and Standard Life Aberdeen Plc, the 39% return for Schroders Plc and Man Group Plc’s 19% rise.Amundi, 68 percent-owned by France’s Credit Agricole SA, recently announced record quarterly inflows of almost 43 billion euros ($48 billion) in the three months through September, breaking a streak of three consecutive quarters of client withdrawals. Its 1.6 trillion euros of assets under management — up from 952 billion euros when it listed on the stock market in November 2015 — make it Europe’s biggest money manager.The most impressive statistic, however, is the one element of Amundi’s financials over which it has most control: its costs.The company’s frugality has nudged its cost-to-income ratio lower in recent years; it fell to an industry-beating 51.1% at the end of the third quarter. By comparison, Deutsche Bank AG-controlled DWS aims to cut its ratio to 65% and doesn’t expect to achieve that until the end of 2021.What could knock Amundi off its perch? Well, DWS Chief Executive Officer Asoka Woehrmann told the Financial Times this month that he plans to challenge his rival’s dominance by finding a takeover or merger that would increase his firm’s 752 billion euros of assets. Earlier this year Switzerland’s UBS Group AG was reported to be considering strapping its fund management arm to DWS. Insurer Allianz SE was also said to be interested in the German investment firm. Any such deal would create a challenger with the scale to match Amundi.But the French fund giant’s CEO Yves Perrier is unlikely to just stand by if industry consolidation begins. Now that he’s finished absorbing Pioneer Investments, a fund management unit bought from Italy’s UniCredit SpA for 3.5 billion euros in 2017, the decks are clear. While these mega-mergers might not happen, Amundi is well placed if they do. With its shares trading at their highest in more than 18 months, Perrier has the currency to fund a deal.To contact the author of this story: Mark Gilbert at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
BHP shareholders are poised to reject a motion urging the world's biggest listed miner to suspend membership of some industry bodies judged to be at odds with goals to tackle climate change, initial voting in London suggested on Thursday. Ethical investors have called for the suspension, arguing BHP's membership of some industry organisations funds pro-coal lobbying. One of BHP's biggest shareholders, Aberdeen Standard Investments, part of Standard Life Aberdeen, last week spoke out in favour of the resolution, saying lobby groups can be a major obstacle to positive change.
One of BHP's biggest shareholders Aberdeen Standard Investments on Wednesday added to pressure for the world's leading miner to cut ties with lobby groups it says are at odds with the company's pledges on climate leadership. Earlier, the Church of England Pensions Board urged shareholder advisers to review their opposition to a resolution calling on BHP to withdraw from groups that lobby for policies inconsistent with global climate change limitation goals. Aberdeen Standard Investments, which holds around 3.2% of BHP's stock, said it was taking the rare step of speaking out ahead of a vote at BHP's annual shareholder meeting in London on Oct. 17 because of the urgency of tackling climate change, and after its research found the lobby groups were the biggest single obstacle to progress.