Aberdeen Asset Management's (ADN) two UK equity income investment trusts and its Aberdeen Private Equity (APEF) closed-ended fund could be vulnerable to mergers after the fund group agreed a £11 billion takeover by insurer Standard Life (SL), according to Numis.
Analysts at Numis said most of the two dozen investment trusts run by both groups were likely to emerge unscathed from the merger, which could spark a raft of consolidation within both groups' open-ended fund ranges.
But they highlighted crossover among some of the trusts run by both groups. 'We do not envisage any significant impact from the merger on most of the individual investment trusts (which have independent boards), although there are some areas of overlap for the combined group,' they said.
'It will run three UK equity income funds: Dunedin Income Growth (DIG), Murray Income (MUT) and Standard Life Equity Income (SLET). However, the Standard Life vehicle, managed by Thomas Moore, is differentiated by an all-cap approach, and there is a greater argument in our view to merge the two Aberdeen funds,' they said.
'It will run two funds of private equity funds: in our view, Aberdeen Private Equity (APEF) is sub-scale, but a merger with Standard Life Private Equity (SLPE) would not be straightforward given the nature of the portfolios and the fact that both funds are trading at discounts to net asset value.'
But they dismissed the chances of Aberdeen's diversified growth team, which investments in specialist investment trusts, being subsumed by the team behind Standard Life's £25 billion Global Absolute Return Strategies fund. 'The investment approaches are very different, and we believe that the teams are likely to remain separate entities,' they said.
While Standard Life is the dominant player in the merger, Aberdeen has a much larger investment trust range, with 20 closed-ended funds accounting for around £6.3 billion of assets. Standard Life runs four investment trusts with net assets of £1.3 billion.
Combined investment trust range
| Name | Sector | Sub-sector | Net assets (£m) | Premium (+) / discount (-) |
|---|---|---|---|---|
| Aberdeen Asset Management | 6,258 | |||
| Aberdeen New Dawn | Asia Pacific | Ex Japan | 244 | -13.9 |
| Edinburgh Dragon | Asia Pacific | Ex Japan | 620 | -12.3 |
| Aberdeen Asian Income | Asia Pacific | Income | 386 | -8 |
| Aberdeen New India | Asia Pacific | India Equity | 242 | -12.2 |
| Aberdeen New Thai | Asia Pacific | Other Countries | 94 | -16.3 |
| Aberdeen Asian Smaller Cos | Asia Pacific | Smaller Company | 354 | -14.2 |
| Aberdeen Emerging Markets | Emerging Markets | Global | 278 | -14.8 |
| Aberdeen Frontier Markets | Emerging Markets | Global | 112 | -9.5 |
| Aberdeen Latin American Income | Emerging Markets | Latin America Regional | 47 | -11.9 |
| Aberdeen Diversified Inc & Gwth | Global | Absolute Return | 302 | -8.1 |
| Murray International | Global | Equity Income | 1,526 | -1.5 |
| Aberdeen Japan | Japan | General | 86 | -9.5 |
| North American Income | North America | General | 365 | -8.8 |
| Aberdeen Private Equity | Private Equity | Fund of Funds | 130 | -20.9 |
| Aberdeen UK Tracker | UK | All Companies | 341 | -6.2 |
| Shires Income | UK | Equity & Bond Income | 71 | -12 |
| Dunedin Income Gwth | UK | Equity Income | 383 | -10.1 |
| Murray Income | UK | Equity Income | 520 | -7.3 |
| Aberdeen Smaller Companies Income | UK | High Income SmCos | 50 | -18.6 |
| Dunedin Smaller Cos | UK | Smaller Company | 106 | -16.8 |
| Standard Life Investments | 1,271 | |||
| Standard Life Private Equity | Private Equity | Fund of Funds | 460 | -12.7 |
| Standard Life Inv Property Inc | Property | UK | 333 | 4.8 |
| Standard Life Equity Income | UK | Equity Income | 204 | -7.2 |
| Standard Life UK Smaller | UK | Smaller Company | 274 | -3.2 |
Source: Numis Securities
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