Aberdeen Asset's largest investor sells 16% stake

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The Independent Online

Phoenix, the US life insurer and investment house, finally brought an end to its stormy nine-year relationship with Aberdeen Asset Management yesterday, selling its 16 per cent stake in the UK fund manager for about £38m.

Phoenix, the US life insurer and investment house, finally brought an end to its stormy nine-year relationship with Aberdeen Asset Management yesterday, selling its 16 per cent stake in the UK fund manager for about £38m.

The US group has been Aberdeen's longest and most committed external shareholder, first taking a stake in the group in March 1996, when its shares were trading at about 120p - 20 per cent higher than yesterday's sale price of 100p. During its time as an investor, Phoenix has seen the shares hit highs of 720p, in January 2001, only to fall to just 25p by October 2002.

While the resolution of the split-capital investment trust debacle on Christmas Eve, and a strong set of results last week has buoyed Aberdeen's share price over the past few weeks, many investors are optimistic that much stronger growth lies ahead now that its troubles are behind it.

Phoenix said it was in the process of rationalising its non-US assets, and said that it was satisfied that now was the right time to make its exit. "We are in the midst of exiting what we see as non-strategic assets, and Aberdeen is among these," Alice Ericson, a spokesperson for Phoenix, said. "The timing was right this week after Aberdeen had reported its results, and had resolved its issues with the Financial Services Authority."

Goldman Sachs administered the offer of Phoenix's 38.1 million shares, which were in demand yesterday. After opening at 107.5p, the shares fell as far as 99p in early trading before closing up at 108p.

Initially, Phoenix's investment in Aberdeen, whose chief executive is Martin Gilbert, came as part of a distribution agreement between the two firms, which saw Phoenix selling Aberdeen's products in the US. It upped its stake to 24 per cent in 2001. Its position was diluted in 2003 when Aberdeen issued equity for its purchase of Edinburgh Fund Managers, and Phoenix declined the offer to purchase more shares in the business.

Aberdeen put the total cost of the split-cap investment trust crisis at more than £80m, when it announced its latest results. As well as incurring some £7m in legal fees, it agreed to pay £74m in compensation to investors in its funds.

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