International private banking and asset management group LGT has agreed to acquire the UK and Jersey discretionary fund management business of Abrdn for £140m ($168m, €159m).
The deal is expected to complete in second half of 2023.
With this transaction, involving approximately £6.1bn in assets under management and close to 140 employees, LGT is further strengthening its position in the UK wealth management market.
Upon closing of the deal, the UK wealth arm of LGT will assume the client relationships of the acquired business and all of its employees. LGT Wealth Management will increase its assets under management to over £28bn.
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 DFM business.
Ben Snee, chief executive of LGT Wealth Management: “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.”
Time to leave the market
Abrdn said that its DFM arm would need to “build much greater scale” in order to succeed in the longer-term market. With Abrdn’s strategy for its personal vector focused on integrating tech with Interactive Investor (II) with financial planning, Abrdn 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.
The asset management giant 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 unit in order to maximise opportunities available through that business’ distribution model.
Abrdn told International Adviser that after the sale it “will no longer offer discretionary investment management services on the Channel Islands” and investors “will still be able to access Abrdn funds via their normal channels”.
Stephen Bird, Abrdn chief executive, 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.”