The Investment Column: Acquisition of Deutsche has transformed Aberdeen

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The Independent Online

Martin Gilbert, the chief executive of Aberdeen Asset Management, can look back on 2005 with pride. The asset management group, brought low by the mis-selling scandal surrounding split-capital investment trusts, has been reshaped as "the fund manager's fund manager". Thanks to the £265m acquisition of Deutsche Asset Management, which more than doubled its size, it is one of the best balanced fund managers on the stock market.

The focus as Mr Gilbert presented full-year results yesterday was not on the figures, good though they were, but on comments about the acquisition of Deutsche, which completed on the last day of the financial year in September.

Such acquisitions are always disruptive. The institutional investors on whose behalf Deutsche has been investing might decide to take their money elsewhere if they take against Aberdeen. And the Deutsche employees themselves might walk, taking clients with them. Aberdeen is keenest to keep Deutsche's fixed-income investment business and has tied in the fund managers there on a three-year remuneration deal, so it should retain more than 95 per cent of the £32bn of assets under management. It should also comfortably exceed its target of keeping hold of 30 per cent of the equity fund management business.

So Aberdeen now runs £72bn of assets, split evenly between Europe, North America and Asia. About 45 per cent apiece is invested in equities and fixed-income assets, with the remaining 10 per cent in property. Sceptics might argue that Aberdeen has diluted its exposure to fast-growing Asia and dangerously exposed itself to bonds and property at the top of booms in those asset classes. But Westerners are coming round to the idea of saving more, and will need proportionally more fixed income assets as they age.

The split-cap débâcle cost Aberdeen £74m in a settlement for private investors and trashed its reputation in that area. But it sold most of that business, and the fund inflows across the rest of the group show there is a healthy core on to which Deutsche can be grafted.

We have twice tipped this stock in 2005 and are not inclined to change our view until it squeezes more benefit from the Deutsche acquisition than the City currently forecasts. Buy.

Careful investors should hold on to fast-growing Helphire

Helphire doesn't welcome careful drivers. There is nothing it likes more than a good prang, since it supplies replacement cars to the poor unfortunates caught up in accidents which are not their fault.

The company has tied up a string of deals with insurance companies which offer replacement hire cars as part of their cover. So far, perhaps 40 per cent offer such a service, and Mark Tucker, the chief executive of Helphire, reckons another 40 per cent are in the process of talking to replacement car hire operators such as himself. With about a million non-fault accident victims to rescue every year, there is plenty more opportunity for Helphire to grow.

Helphire boasted a volume of business some 26 per cent higher than last year when it reported on the six months to 30 September yesterday. And then there were the acquisitions on top, making a 76 per cent increase in revenue and 198 per cent in pre-tax profits. The purchase of Albany last year has taken Helphire further into personal injury claims management and the organisation of vehicle repair, all lucrative areas. Swift, which operates at the luxury end of the market, will start contributing to results in the second half.

What the acquisitions mean is that an old internal venture, the e-register business offering replacements for insured jewellery which has been lost or stolen, now doesn't look core, and could be sold or floated.

Brokers raised forecasts for this and the next financial year after yesterday's results. Its shares, up 2.25p to 358.25p, trade on 17 times 2007 earnings. Hold.