Fund giant founder abandons US$1 trillion club dream
Published on 02 Oct 2019. | Source: thestar.com.my
THE merger that created Standard Life Aberdeen Plc two years ago was designed to produce an asset manager big enough to survive the existential threats facing the fund management industry.
Martin Gilbert, founder of the Aberdeen side of the equation, hoped to join what he called "that $1 trillion club” by growing assets under management. The reality has been somewhat different.
Standard Life Aberdeen’s current market value of 6.7 billion pounds ($8.2 billion) is about half of what it was in August 2017 when the merger was completed. Back then, the company oversaw 670 billion pounds. Outflows in every quarter since have reduced that to 577.5 billion pounds - leaving it about 30% short of the magical figure cited by Gilbert.
So Wednesday’s announcement that he’s leaving the firm after more than three decades marks something of a failure for the dealmaker. Starting with what he says was "three people in one office in Aberdeen, ” Gilbert brokered more than 40 deals during his career, with his fund management company qualifying for inclusion in the benchmark FTSE 100 index in 2012.
His departure was perhaps inevitable after Standard Life Aberdeen made Keith Skeoch sole chief executive officer in March, abandoning the dual-CEO roles around since the merger and demoting Gilbert to vice chairman. But it must still sting.
The merger was supposed to herald a wave of tie-ups in the industry as fellow mid-sized asset managers recognized the benefits of scale and sought to strengthen themselves through alliances. Apart from the creation of Janus Henderson Group Plc, though, big M&A deals have proven illusory. And even the architect of that transaction seems to have had second thoughts. "Big isn’t necessarily better, ” Andrew Formica, who engineered the 2017 merger of Henderson with Janus Capital, said in August from his new position as CEO of the much smaller Jupiter Fund Management Plc.
It’s impossible to verify or falsify Skeoch’s oft-repeated claim that his company is still better off than the two standalone companies would have been. But it’s fair to say that the perceived failure of the industry’s two big mergers to deliver value for shareholders has deterred others from seeking similar transactions.
For his part, Gilbert says he’s "looking forward to fresh challenges in the next stage of my career.” The 64-year-old looks set to join U.K. fintech startup Revolut Ltd. Two years on, though, the biggest deal of his career looks more like a warning of the dangers of overconfidence than a roadmap for the asset management industry. - Bloomberg
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."
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