Aberdeen Asset Management has sold £100 million (€138 million) of preference shares to Mitsubishi UFJ Trust and Banking Corporation (MUTB) to seed future products with enough capital to attract larger distributors.
The shares do not have voting rights but can convert to ordinary shares in a “trigger” event.
Aberdeen’s board says that the ability to generate organic growth through the launch of new funds will be enhanced if Aberdeen is able to commit increased levels of seed capital so that the funds are launched at a credible size by the group’s larger distribution partners and advisers.
Martin Gilbert, chief executive of Aberdeen Asset Management, says: “Last year’s acquisition of Scottish Widows Investment Partnership has provided us with a broader range of capabilities, which we aim to develop further. To do this effectively it is important we support new fund launches with seed money, demonstrating our commitment to them. This attractively priced additional capital will support this increased activity whilst maintaining the strength of the balance sheet.”
The shares will count towards Aberdeen’s additional tier 1 capital under capital adequacy laws. The existing headroom above the company’s regulatory capital requirements will be protected and Aberdeen says it will be well placed to accommodate any future changes to capital adequacy laws.
A conversion trigger event will be deemed to occur if the company determines that at any time its tier 1 capital ratio has fallen below 5.125%.
The shares will have a total paid-up amount of 50p per share, giving a total of 200 million 2015 non-voting preference shares when issued.
MUTB, which already owns about 17% of Aberdeen’s ordinary shares, will be entitled to a fixed dividend of 5% per annum on the total paid up amount of each share in priority to ordinary shareholders. This dividend will be non-cumulative and payable at the company’s discretion.
The issuance is subject to shareholder approval and other conditions. Aberdeen’s annual general meeting will be held on Monday, July 6, 2015.
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