Shares in Standard Life Aberdeen rose 1.2% in early trading this morning, the first trading day of the new firm following completion of the merger between Standard Life and Aberdeen Asset Management.
The merger between FTSE 100-listed Standard Life and FTSE 250-listed Aberdeen Asset Management, announced in March, was confirmed in an announcement from the London Stock Exchange this morning following court approval for the merger last week.
Standard Life Aberdeen will be Europe’s second largest funds firm with assets under administration of £670 billion (€737 billion).
The new firm, which has a market capitalisation of over £11 billion, will be headquartered in Edinburgh. The group’s investment business, to be known as Aberdeen Standard Investments, currently manages £583 billion.
The merger of the Scottish firms is the latest in a wave of consolidation among actively managed asset management firms, as the industry responds to growing competition from cheaper passively-run funds – which use algorithms to track market indices rather than using managers to pick investments.
Over the past year, passive funds globally have taken in around £390 billion while more expensive active funds have seen £412 billion in outflows.
Passive funds, over the last decade, have grown four times faster than actively managed funds.
Last week Standard Life revealed that £3.7 billion was withdrawn from its funds in the first half of 2017.
Meanwhile, Aberdeen Asset Management suffered outflows of £13.4 billion in the six months to March: only the latest in a pattern of 16 consecutive quarters of net outflows, totalling £107 billion.
The merger is targeting job cuts of 800 roles, almost 10% of the combined workforce of the new firm, and savings of £200 million a year.
Keith Skeoch and Martin Gilbert will be co-chief executives of the combined firm. Skeoch, former chief executive at Standard Life, will manage the day-to-day running of the new firm while Gilbert, former chief executive of Aberdeen Asset Management, will take charge of external affairs.
Standard Life’s Gerry Grimstone will remain as chairman of the enlarged group.
Gilbert said that the new firm would benefit from a more diverse range of investment management skills as well as scale across asset classes and geographies.
“We believe this will enable us to deliver an even better proposition and service to our enlarged client base,” he said.
Overall, Standard Life Aberdeen will have offices in 50 cities around the world, servicing clients in 80 countries.
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