New Star bids £60m for Aberdeen funds

Aberdeen Asset Management is in talks to sell some of its retail funds to New Star Asset Management, the fund manager set up by John Duffield.

New Star has offered in excess of £60m for Aberdeen's funds, but Aberdeen yesterday said there was no certainty that it would enter in to a binding agreement.

Analysts have said Aberdeen's funds could fetch up to 4 per cent of their assets, and Aberdeen yesterday indicated a significant premium had been offered, saying the financial terms from New Star meant it was "in the interests of shareholders to explore New Star's proposal".

Aberdeen has been wracked by financial problems through its heavy involvement in the split-capital investment trust sector. Four of its 19 funds are in receivership. It has been seeking to boost capital to pay off its debts and has announced plans to float its property fund division. Further asset sales had been expected.

Aberdeen yesterday refused to elaborate on how many of its retail funds are up for sale. The assets involved are less than £4bn. The group has a range of fixed-interest funds that are thought likely to be the most attractive to New Star, as well as its UK equity funds and technology fund.

Mr Duffield set up New Star Asset Management in 2001 after an acrimonious split with Commerzbank, the owners of Jupiter Asset Management, which Mr Duffield founded. New Star has brought in £2bn under management, but Mr Duffield has been scouring the market for an acquisition.

"This is a clever deal by New Star," Mark Dampier, head of research at Hargreaves Lansdown, said. "It needs to do something to boost its assets, and Aberdeen needs to reduce its debts. Mr Duffield can cherry pick its best funds, which causes less upheaval than a full-scale takeover."