Abrdn stock hit by outflows; assets slip 1% to £496bn

Abrdn plc HQ, Edinburgh

Abrdn, the Edinburgh investment giant, said on Tuesday its assets under management and administration slipped 1% to £496 billion in the first half of 2023 as it reported net outflows “excluding liquidity” of £4.4 billion.

Abrdn said positive flows of £1.9 billion at its Interactive Investor (ii) business were “offset by outflows” in its investments unit and adviser business.

Abrdn shares fell as much as 11% to around £1.93 to give the FTSE 100 firm a stock market value of roughly £3.7 billion.

That’s despite the Edinburgh investment group also announcing on Tuesday it will double its current share buyback programme to £300 million.

For the last 12 months, Abrdn shares are up roughly 20%.

Abrdn said its first-half net operating revenue was 4% higher at £721 million with growth in its adviser and personal businesses offsetting lower revenue in its investments division.

Adjusted operating profit for the first half was up 10% to £127 million, but Abrdn reported IFRS loss before tax of £169 million (H1 2022: loss £326m) “largely driven by the fall in market value of our listed stakes.”

Interim dividend was unchanged at 7.3p.

Abrdn CEO Stephen Bird repeated his confidence in the group’s current strategy and dismissed speculation by analysts that the Edinburgh firm could attempt to sell off parts of its business.

“A break up is out of the question,” Bird told Bloomberg News.

“You can’t respond to the cycle by looking at just one part of the business.”

Bird said in his results statement: We continued to move at pace to execute our strategy over the first six months of 2023 in a challenging macro environment.

“Thanks to Abrdn’s revenue diversification and the resilience we have built into our business with the acquisition of Interactive Investor last year, we grew revenue by 4% and adjusted operating profit by 10% over the period.

“We are on track to deliver our £75m cost savings target in Investments as we continue our work to restore that business to a more acceptable level of profitability.

“We have a strong balance sheet, bolstered by £535m of cash realised during the period from the sales of our non-core Indian investments in HDFC Life and HDFC Asset Management.

“This supported a share buyback of £150m, which is near completion, and we are announcing an extension to this programme to £300m.

“We have also deployed capital during this period to further strengthen our position in Investments through bolt-on acquisitions.

“We look forward to completing our acquisition of the specialist healthcare fund management business of the US-based Tekla Capital, during H2, which will add some $3.2bn of AUM and $32m of revenues.”

Bird added that Abrdn’s asset management business needs to be restored to a higher level of profitability and that there is still work to be done to complete the transformation of the firm.

RBC Brewin Dolphin senior investment manager John Moore said: “Abrdn’s results are a real mixed bag, but there are some tentative signs its move towards diversification is beginning to pay off.

“The closure of its Global Absolute Return Strategies fund and the selling down of its Indian investments mark the end of an era as it looks to build a modern financial services business.

“The latter is helping to fund further shareholder returns, with the share buyback programme being extended …

“The addition of interactive investor is proving to be a major part of Abrdn’s transformation plan, while further acquisitions will bolster its offering.

“Although its share price is up one-quarter on a year ago, Abrdn still has some way to go with its plans and there will be challenges ahead as markets remain volatile.”