Asset manager Abrdn declares £300m share buyback scheme

Scottish investment group Abrdn has announced that it is undertaking a £300million share buyback programme. 

The active asset manager has appointed Goldman Sachs to repurchase shares worth up to £150 million on its behalf as part of the scheme’s first phase, which is set to run between now and late December.

Formerly known as Standard Life Aberdeen, the Edinburgh-based company told investors in a trading update that the purpose of the buyback was to hand back excess capital to shareholders.

Repurchase: The Edinburgh-based company told investors in a trading update that the purpose of the buyback was to hand back excess capital to shareholders.

Abrdn shares jumped 8.1 per cent to 161.1p in early trading on Wednesday, making it the top riser on the FTSE 100 index, although their value has still plunged by around a third in the past six months.

Last week, analysts at multinational bank Citi downgraded the firm’s stock from ‘neutral’ to ‘sell’ due to concerns that the business would not achieve its revenue targets due to poor market conditions.

Abrdn, which recently bought Interactive Investor, currently predicts compound annual revenue growth in the ‘high-single digits’ between 2020 and 2023, an outlook most recently upheld in its annual results published in March.

Those results showed the company’s first yearly increase in turnover since the merger between Standard Life and Aberdeen Asset Management five years ago.

Fee-based revenue increased by 6 per cent to £1.52billion thanks to much lower net outflows, a significant rise in performance fee income, and healthy expansion across Asia and the Americas.

Pre-tax profits also grew by a third to £1.12billion, which the firm attributed to the sale of stakes in the life insurance and asset management arms of Indian-listed financial services employer HDFC.

 

Chief executive Stephen Bird said Abrdn had made ‘huge strides forward’ during the year through, amongst other factors, enhancing its relationship with its biggest client, Phoenix Group, selling non-core assets and buying II.

In late May, the FTSE 100 group finalised the purchase of II, Britain’s second-largest investment platform, in a deal worth almost £1.5billion, thereby gaining about £59billion in assets under administration and over 400,000 more customers.

Many of these customers have started investing during the Covid-19 pandemic, with a significant proportion of them either being women or young adults.

Abrdn expects the purchase of Interactive Investor to lead to double-digit growth in adjusted earnings in the first full financial year following the deal’s completion.

Stephen Bird has said the acquisition ‘marks an important step forward in delivering our strategy for client-led growth,’ adding that ‘ii’s high-tech direct investing service is the perfect complement to the high-touch wealth and financial planning capabilities we already offer.

‘As a leading player in a fast-growing market, with a scalable technology platform and a distinctive subscription-based model, the acquisition of ii will also diversify and grow our revenues.’

This post first appeared on Dailymail.co.uk