Aberdeen Asset Management and Life Assurance Holding Corporation (LAHC) have agreed terms under whic...
Aberdeen Asset Management and Life Assurance Holding Corporation (LAHC) have agreed terms under which Aberdeen will become the manager, under an exclusive 10-year contract, of the investment funds of the LAHC Group and specifically its principal subsidiary Windsor Life Assurance.
LAHC's funds total £5.5bn and are expected to generate annual fee income to Aberdeen in excess of £11m for the first year of the investment management agreement. Windsor's investments comprise a large number of managed funds in addition to unit trusts, fund of funds, fixed interest and direct equity holdings.
The deal has two main attractions for Aberdeen, according to Gary Marshall, sales and marketing director: it adds to the number of life offices whose funds the company manages and, secondly, the 10-year contract is an opportunity for long-term revenue growth.
Marshall said: "We already manage funds for Scottish Provident and Century Life life offices, giving us the necessary expertise to take on more funds in this area without any major addition to our cost base."
He continued: "A 10-year contract gives us a long-term revenue stream and, going forward, given that LAHC are keen to expand, our right of first refusal should mean further fund management opportunities."
Marshall added that, in due course, the unit trusts would probably be rolled into Aberdeen's own funds.
Aberdeen will also acquire the LAHC Group's associated investment management activities. The group is issuing 15 million new ordinary shares (9.7%) and loan notes to the value of £10m to LAHC. The total cost of the deal to Aberdeen is £86m.
The acquisition means an increase of 19.3% in funds under management as at 28 February 2001 of £5.5bn to £34 bn,
and further diversifies Aberdeen's funds.
Aberdeen and LAHC will enter into a relationship agreement to govern the holding of the ordinary shares in Aberdeen by LAHC.
The relationship agreement provides
for the appointment of a director nominated by LAHC to the board of Aberdeen and locks in shares for a period of one year, 75% of the shares for a further six months, and 50% of the shares for a further six months.
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