There’s not much in the Scottish financial sector that’s still owned in Scotland or indeed even has a ‘Scottish’ name any more. In recent months, the English insurance company London Life has dropped Scottish Life (founded 1881) and Scottish Provident (founded 1837) from its portfolio of subsidiaries – both had been acquired around the turn of the century and look after the pensions of 1.4 million people between them.
Now part of Aberdeen Asset Management
A recent story in The Times suggested that this would ‘…leave Scottish Widows, owned by Lloyd’s Banking Group, as the only sizeable life insurance brand with a ‘Scottish’ prefix that references its heritage north of the border.’ It went on to claim that Lloyd’s was seeking a buyer for Scottish Widows and speculated that the name ‘Scottish’ could disappear entirely from the insurance sector which Scots did so much to create
Well, now we know that at least part of the Scottish Widows name is likely to survive. It’s been confirmed that Scottish Widows Investment Partnership has been sold to fund manager Aberdeen Asset Management in a deal worth £660m. However, it does the life, pensions and investment business, which Lloyds said was “core” to the group.
Such deals are seldom straight-forward. As well as paying Lloyds up to £100m in five years time depending on how the business performs, Aberdeen has given Lloyds a significant stake in its own business because it’s paying for the deal in shares. It means that Lloyds now has a 9.9% stake in AAS, worth around £560m. But there are benefits to Aberdeen as well since it will now manage assets on behalf of Lloyds as well as taking over Scottish Widows private equity and infrastructure fund management businesses as part of the deal.
In a statement, Lloyds said that “the sale and strategic relationship are expected to result in a stronger asset management partner for the group and its customers, combining Aberdeen and SWIP’s strengths across fixed income, real estate, active and quantitative equities, investment solutions and alternatives.”
Aberdeen Asset Management chief executive Martin Gilbert described the deal as “significant”, adding that it would strengthen “our investment capabilities and adds new distribution deals.”
As a result of the deal, Aberdeen will add £136bn in assets to its books, making it the biggest listed fund manager in Europe with assets under management of around £340bn.