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AAA-rated star encourages Aberdeen to fund Swip deal with cash
by Dylan Lobo on Oct 28, 2013 at 08:06
SVG Investment Managers’ (SVGIM) Adam Steiner believes Aberdeen Asset Management would generate better value for shareholders if it paid for Scottish Widows Investment Partnership in cash rather than shares.
Citywire AAA-rated Steiner (pictured), whose £150 million SVG UK Focus fund has 8.3% of its assets invested in Aberdeen, told Wealth Manager, ‘We believe that value for Aberdeen shareholders would be enhanced if Aberdeen offered cash instead of shares for some or all of the consideration.’
Last week Aberdeen confirmed it was in talks to acquire Swip, with any deal funded through the issue of new shares, alongside deferred payments in cash, conditional on performance. As the government has a 32.8% stake in the bank, the taxpayer could end up with a 10% stake in Aberdeen should the firm use shares to fund the entirety of the deal.
'The potential acquisition would add further scale and diversity to the company's product range, thus complementing organic growth, consistent with the board's strategy,' Aberdeen said in a statement.
While some have expressed concern over how the purchase will impact the firm's dividend policy, Steiner believes if the deal gets the green light it will increase the attraction of Aberdeen.
‘Ultimately, we think this would be a great deal for Aberdeen, which we believe is one of the most undervalued companies in the UK stockmarket, he said.
Steiner, who is chief executive at SVGIM, co-manages the UK Focus fund with AAA-rated Jamie Seaton.
In the three years to the end of September the fund has returned 62% versus a 33% rise in the FTSE All Share.
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