Abrdn sells £6bn discretionary fund unit to LGT

Abrdn plc said it has agreed to sell Abrdn Capital, its discretionary fund management (DFM) business, to Liechtenstein-based private bank LGT for about £140 million.

LGT said completion of the transaction “by way of a share deal” is expected in the second half of 2023, following receipt of customary regulatory approvals.

“LGT’s offer values the business for acquisition at an amount of GBP 140 million,” said LGT.

The sale involves the transfer of £6.1 billion in assets under management and approximately 140 employees.

The business being sold to LGT delivered £40 million in revenue in 2022, and currently serves around 4,000 clients.

Abrdn said: “In order to succeed in the longer term in the DFM market, Abrdn’s view is that this part of the business would need to build much greater scale.

“With Abrdn’s strategy for its Personal vector focused on integrating the high-tech, high-touch model of interactive investor (ii) with financial planning, Abrdn has concluded that another owner would be better placed to invest to deliver greater scale in the DFM business.

“Abrdn’s Managed Portfolio Service (MPS) business, which is currently part of the DFM business, is better aligned to its group strategy and will be carved out and retained prior to completion of the transaction.

“Abrdn views MPS as an important growth channel that aligns well to the way that the UK personal investment market is developing.

“The MPS team will be moved to sit within Abrdn’s Adviser vector in order to maximise opportunities available through that business’ distribution model.”

Abrdn CEO Stephen Bird said: “We are establishing one of the UK’s leading personal wealth businesses, and this deal represents an important step forward in our strategy to focus on our high-growth, platform-led, businesses.

“Our track record over the past two years shows that where we identify non-core capabilities, we will look to divest and redeploy capital in ways that better align with the interests of our investors, clients and customers.

“The decision to sell our DFM business underlines our commitment to that principle.”

Richard Wilson, CEO Personal, Abrdn, said: “DFM is a high quality, profitable business with a strong client focus and a brilliant team. 

“However, in line with the way the market is moving, it needs greater scale and will be a better fit for LGT.

“Within Abrdn’s Personal vector, our strategy for growth is focused on integrating the services of ii with financial planning services for our customers.”

Noel Butwell, CEO Adviser, Abrdn, said: “The Adviser vector is a natural home for our MPS colleagues, and we look forward to welcoming them.

“We’ll continue to invest in our MPS solutions and build on the successes that the team has had to date.

“The prospects for MPS solutions look positive with almost half of wealth managers expecting to use these solutions more extensively in the near term and we are confident that our skills, expertise and track record will deliver real results and help our UK adviser clients serve their customers better and grow their businesses.

“Our focus on serving advisers in the UK means we are committed to making it easier to work with us.

“Advisers will see a greater alignment of our technology and investment solutions to support them in meeting the needs of their clients.”

Evercore acted as financial adviser to Abrdn in relation to the transaction.

LGT said: “The high-quality UK and Jersey-based discretionary fund management business that LGT has agreed to acquire from Abrdn, encompasses a profitable and long standing portfolio of high-net-worth clients and charities.

“Upon closing of the transaction, LGT Wealth Management, the UK-based wealth manager and part of LGT, will assume the client relationships of the acquired business and all of its employees.

“LGT Wealth Management will thus increase its assets under management from around GBP 22 billion as at end January 2023 to over GBP 28 billion.

“In view of the integration of the additional staff, LGT Wealth Management plans to expand its existing locations in London, Edinburgh, Bristol and Jersey, while also increasing its UK footprint to take on the offices in Birmingham and Leeds currently operated by abrdn’s discretionary fund management business.”

LGT Wealth Management CEO Ben Snee said: “We see a strong strategic fit between Abrdn’s discretionary fund management business and LGT.

“There is clear similarity in ethos and approach between the two businesses, with a genuine desire to provide first-class client solutions and passion for conviction-based investing.

“We very much look forward to welcoming our new colleagues to the team and are convinced that by combining our footprint and offerings, including Abrdn’s proven experience in the charities sector, we’re set to achieve further successful growth in the UK market …

“With the agreed acquisition, LGT is further strengthening its position in the UK as one of its key European markets.

“LGT has continuously expanded its wealth management business in the UK, providing a broad range of long-term investment solutions to high-net-worth private individuals, as well as financial advisers and institutional clients.

“LGT Wealth Management, formerly known as Vestra Wealth, was founded in 2008 and was acquired by LGT in 2016. LGT Wealth Management currently employs more than 475 staff.”

H.S.H. Prince Max von und zu Liechtenstein, Chairman, LGT: “We very much look forward to welcoming Abrdn’s discretionary fund management clients to LGT.

“The business’ strong investment performance and ESG-strategy make it a perfect fit for LGT.

“We are convinced that, in turn, our stability, entrepreneurial spirit, focus on excellent client service and investment expertise, make us a reliable and attractive partner for our future clients.”