Abrdn: Scottish funds giant 'resilient' after swinging to loss and unveiling sale involving 140 staff

Abrdn’s chief executive has described 2022 as “one of the toughest investing years in living memory” after the Scottish investment giant swung to a full-year, pre-tax loss and unveiled a disposal involving 140 staff.

Stephen Bird revealed that the group had racked up a £615 million loss before tax for the year to the end of December, compared to a profit of just over £1.1 billion the year before. Assets under management and administration fell 8 per cent to £500bn while the company reported a further year of net outflows of client funds. It announced a 14.6p per share full-year dividend, broadly in line with analysts’ forecasts.

Edinburgh-headquartered Abrdn, formerly known as Standard Life Aberdeen, was hit by the turmoil in equity and bond markets last year. Rising geopolitical tensions and the conflict in Ukraine have also impacted investment manager earnings. Chief executive Bird is now two years into a three-year plan to turn around the group’s fortunes and stressed that the business was resilient, generating an adjusted operating profit of £263m in 2022, though that was down by almost a fifth on the prior year.

Bird said: “We are building a stronger Abrdn. As we exit year two of our three-year strategic plan, the structure of our group is now broadly set. We are increasingly well positioned for growth. In one of the toughest investing years in living memory, the resilience we have created in our business model helped us to deliver adjusted operating profit of £263m.

“We are making progress on our commitment to focus on areas of scale and strength, and to simplify and reduce costs in the business. Overall, we are increasingly well positioned for the cycle turning. Our three businesses work well together and we are building the linkages that will create value across the group.

“Our capital position is strong and we are reinvesting into growth areas, while providing returns to shareholders. We look to the year ahead with confidence and a clear focus on delivering for clients and our wider stakeholders,” he added.

The annual results came as the group announced a deal to sell its discretionary fund management (DFM) arm Abrdn Capital to Liechenstein-based private bank LGT for £140m. The sale involves the transfer of around £6.1bn of assets and some 140 employees. It is understood that about 45 of those staff are based in Scotland. LGT is the private banking and asset management group owned by the Princely Family of Liechtenstein.

Upon closing of the transaction, LGT Wealth Management will assume the client relationships of the acquired business and all of its employees. The deal will see LGT Wealth Management increase its assets under management to more than £28bn.

Abrdn was hit by the turmoil in global equity and bond markets last year.

In view of the integration of the additional staff, LGT plans to expand its existing locations in London, Edinburgh, Bristol and Jersey, while also increasing its UK footprint to take on the offices in Birmingham and Leeds currently operated by Abrdn’s discretionary fund management business.

Ben Snee, chief executive of LGT Wealth Management, said: “We see a strong strategic fit between Abrdn’s discretionary fund management business and LGT. There is clear similarity in ethos and approach between the two businesses, with a genuine desire to provide first-class client solutions and passion for conviction-based investing. We very much look forward to welcoming our new colleagues to the team and are convinced that by combining our footprint and offerings, including Abrdn’s proven experience in the charities sector, we’re set to achieve further successful growth in the UK market.”

Bird said: “We are establishing one of the UK’s leading personal wealth businesses, and this deal represents an important step forward in our strategy to focus on our high-growth, platform-led, businesses. Our track record over the past two years shows that where we identify non-core capabilities, we will look to divest and redeploy capital in ways that better align with the interests of our investors, clients and customers. The decision to sell our DFM business underlines our commitment to that principle.”

Standard Life Aberdeen was renamed Abrdn almost two years ago. The rebrand, created by London agency Wollf Olins, divided opinion when it was announced, with one analyst at the time saying it was likely to leave investors “feeling dazed and confused”. The move marked a milestone in the history of a business that was created through the merger of Standard Life and Aberdeen Asset Management in 2017, and can ultimately trace its roots back to 1825 when the Standard Life Assurance Company was created. Insurer Phoenix Group acquired the Standard Life Assurance business in 2018 and, in 2021, bought the iconic Standard Life brand.

Stephen Bird, Abrdn CEO: 'We are increasingly well positioned for growth.'

Abrdn also announced that former Celtic FC director Brian McBride would be standing down as a non-executive director. Following the change, the board will comprise two executive directors, seven non-executive directors and chairman Sir Douglas Flint, who said: “We will all miss Brian’s insights and guidance.”

John Moore, senior investment manager at wealth firm RBC Brewin Dolphin, noted: “Abrdn’s results were always going to be messy after a period of huge changes at its businesses and volatile markets last year. While the numbers show a company in flux, the strategic plan continues to reshape the business - the sale of the discretionary fund management division and hollow-out of the managed portfolio service offer another step toward better scale and simplification. Abrdn’s share price has been strong on the back of the company becoming a recovery play at the tail end of last year, which boomeranged it back into the FTSE-100.”