Last updated: November 30, 2010 5:31 pm

Aberdeen rules out buying rival Gartmore

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Aberdeen Asset Management has ruled out making an offer for its smaller rival Gartmore in favour of incremental expansion, as reinvigorated client demand for global equities lifted underlying full-year profit by 147 per cent.

Martin Gilbert, Aberdeen’s chief executive, who built up the group with acquisitions since founding it in 1983, said it would focus on organic growth to strengthen its balance sheet.

Mr Gilbert said: “We are concentrating on organic growth and cash generation. That would put Gartmore, or anything else, at a low priority for us.

“They are a good company, but the star culture doesn’t fit with our team-based approach... It’s more akin to Jupiter or Henderson than us.”

Analysts have seen Aberdeen as a possible buyer for Gartmore, which put itself on the market this month after the loss of Roger Guy, its star fund manager.

Mr Gilbert said: “We believe, as does the regulator, that leading fund management groups need to be strongly capitalised in today’s volatile markets.”

Assets under management at Aberdeen, one of the UK’s largest independent asset managers by market value, rose from £137.1bn to £178.7bn in the year to the end of September, as net new business inflows improved in the last quarter.

Increased investor appetite for its global and emerging market equities products helped Aberdeen attract £2.2bn of net new business inflows in the fourth quarter, exceeding analysts’ forecasts of about £1bn, and an improvement on the net outflows of £10.7bn it suffered at the end of last year.

Gross new business for the year rose 144 per cent to £46.6bn, more than twice the peak last reached in 2007 before the financial crisis battered confidence in global markets.

While client funds flowed into its higher margin global equities business, outflows from its fixed income and money-market products continued in 2010, with £44bn leaving those areas.

In the 12 months to September 30, profits before exceptional items rose from £85m to £210m on revenues up from £421.9m to £638.2m. On a statutory level, pre-tax profits rose from £10.5m to £126m. Diluted earnings per share emerged at 8.04p, against losses of 1.7p, with a final dividend of 3.8p taking the full-year pay-out to 7p (6p).

The shares were unchanged at 179p.

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