Abrdn in £1.5bn talks to buy DIY stock-picker Interactive Investor

Published

3 years ago

November 6, 2021

admin

Abrdn, the FTSE-100 asset manager, is in advanced talks to buy Interactive Investor (II) for more than £1.5bn – a deal that will hand it control of one of Britain’s three big DIY stock-picking platforms.

Sky News can reveal that abrdn, headed by Stephen Bird, is in exclusive negotiations to acquire II and hopes to strike a formal takeover deal within the next fortnight.

Abrdn is likely to be forced to confirm the discussions in a stock exchange announcement on Monday morning.

If successfully concluded, the talks will end II’s preparations to join rivals Hargreaves Lansdown and AJ Bell on the London stock market following months of talks about a 2022 flotation.

II has more than 400,000 personal investing clients, positioning it behind only Hargreaves Lansdown by customer numbers in the UK market.

It has made a string of acquisitions of its own, such as the stock-dealing platform The Share Centre, and has about £57bn in assets under administration.

The bold swoop by abrdn which takes it further into direct-to-consumer investing will represent a calculated gamble for Mr Bird, a former Citi executive who joined the asset management group in July 2020.

He has hinted at a desire to pursue targeted acquisitions which help it to diversify its revenue base across three areas: investment, adviser and personal.

Acquiring II would deliver on that ambition in personal investing, and transform abrdn’s digital capability and consumer appeal, one analyst said on Saturday.

Last month, abrdn bought Finimize, a subscription-based investment tips service – a much smaller deal, but one which nevertheless underlined the group’s pivot towards personal investing-oriented activities.

One area of uncertainty for Mr Bird will relate to abrdn shareholders’ reaction to the II news given his predecessors’ decidedly mixed track record in corporate deal-making.

Investors were left underwhelmed by the £11bn merger of Standard Life and Aberdeen Asset Management in 2017, with the combined group having lost close to half its value since the tie-up was announced that year.

Since then, the co-chief executives of Standard Life Aberdeen – now renamed abrdn – have both stepped down.

Martin Gilbert, the Aberdeen Asset Management founder, has emerged in a large number of City posts, including at the helm of AssetCo, which he has begun using as a consolidation vehicle in the asset management sector, while Keith Skeoch remains chairman of the Financial Reporting Council and Investment Association.

For Mr Bird, however, the transaction may come at an opportune time.

Abrdn has total surplus regulatory capital of about £2bn, having sold another chunk of its stake in India’s HDFC in late September, meaning financing the takeover of II is unlikely to be problematic.

The deal also comes sufficiently early in his tenure as CEO to make a potentially significant difference to the long-term performance of abrdn, which has been hit by large fund outflows during most of the period since the 2017 merger.

Under Mr Bird, the tide has begun to turn, with fee-based revenues and adjusted operating profits recently showing their fastest growth since the company was created in its current form.

He has said he wants to turn abrdn into a simplified and more focused investment management group with far stronger digital capabilities for personal and institutional clients.

Since taking the helm of the company, which now manages more than £530bn for clients, he has jettisoned businesses including Parmenion, a platform servicing independent financial advisers, and a real estate division in the Nordics.

Its rebranding in August – which provoked some derision in the City – would, Mr Bird, said, provide “clarity” and leave it “better-positioned to have impact at scale as a global business”.

Nevertheless, abrdn may have to contend with some discontent from rival fund managers whose products are listed on the II platform.

If the deal goes ahead, it will deliver the certainty of a handsome payday for JC Flowers, II’s biggest shareholder and other investors which include a group of venture capital funds.

JC Flowers engineered the combination of II and TD Direct in 2017, since when the business has grown into an industry powerhouse.

The size of the stake in II owned by Richard Wilson, its chief executive, is unclear, but he is expected to remain in place after the takeover, according to insiders.

Mr Wilson has been a vocal advocate for greater involvement for retail investors in companies’ public share sales, and has spoken repeatedly about the stock market being a natural home for the company.

Earlier this year, II appointed Gordon Wilson, a former Travelport executive, as its non-executive chairman as part of its planning for an IPO.

The latest steps being taken by II towards a public debut come months after a review led by Lord Hill, a Treasury board member, recommended measures to make it simpler for retail investors to participate in IPOs.

Ordinary customers are often frozen out of prominent floats, although the advent and rapid growth of services such as that offered by PrimaryBid have begun to make them more accessible.

JP Morgan is advising abrdn on the talks, while II and its shareholders are being advised by Fenchurch Advisory Partners and UBS.

On Friday, shares in abrdn closed at 255.7p, giving the company a market capitalisation of just under £5.6bn.

Abrdn declined to comment this weekend, while II has been contacted for comment.

Business

Insurer Hiscox lines up chairman months after Bayesian sinking

Published

12 hours ago

April 7, 2025

admin

Hiscox, the London-listed insurer, is close to naming a new chairman nearly eight months after the drowning of Jonathan Bloomer on the luxury yacht of technology tycoon Mike Lynch.

Sky News has learnt that Hiscox has narrowed its search to candidates including Richard Berliand, who chairs the interdealer broker TP ICAP.

Insurance insiders said that Mr Berliand was among fewer than a handful of potential successors to Mr Bloomer.

The sinking of the Bayesian off the Sicilian coast last August claimed the lives of Mr Lynch and his daughter, along with five other passengers, including Mr Bloomer.

A former boss of Prudential, Mr Bloomer was a well-liked figure in the City.

He had chaired Hiscox for just a year when he died.

The identities of the other candidates being considered by the company were unclear on Monday.

Hiscox, which has a market capitalisation of just over £3.8bn, has seen its shares slip by about 12pc over the last year.

It was founded as a single underwriter at Lloyd’s in 1901.

A Hiscox spokesperson declined to comment.

Business

Asian stock markets tumble – with Hong Kong’s Hang Seng index suffering worst fall for 28 years

Published

17 hours ago

April 7, 2025

admin

Asian stock markets tumble - with Hong Kong's Hang Seng index suffering worst fall for 28 years

Asian stock markets have fallen dramatically amid escalating fears of a global trade war – as Donald Trump called his tariffs “medicine” and showed no sign of backing down.

Hong Kong’s Hang Seng index of shares closed down 13.2% – its biggest drop since 1997, while the Shanghai composite index lost 7.3% – the worst fall there since 2020.

Taiwan’s stock market was also hammered, losing nearly 10% on Monday, its biggest one-day drop on record.

Elsewhere, Japan’s Nikkei 225 lost 7.8%, while London’s FTSE 100 was down 4.85% by 9am.

Tariffs latest – FTSE falls after Asian markets tumble

US stock market futures signalled further losses were ahead when trading begins in America later.

At 4am EST, the S&P 500 futures was down 4.93%, the Dow Jones 4.32% and the Nasdaq 5.33%.

Markets are reacting to ongoing uncertainty over the impact of President Trump’s tariffs on goods imported to the US, which he announced last week.

Speaking on Air Force One on Sunday, Mr Trump said foreign governments would have to pay “a lot of money” to lift his tariffs.

“I don’t want anything to go down. But sometimes you have to take medicine to fix something,” he said.

The US president said world leaders were trying to convince him to lower further tariffs, which are due to take effect this week.

“I spoke to a lot of leaders, European, Asian, from all over the world,” Mr Trump told reporters.

“They’re dying to make a deal. And I said, we’re not going to have deficits with your country.

“We’re not going to do that because to me, a deficit is a loss. We’re going to have surpluses or, at worst, going to be breaking even.”

Mr Trump, who spent much of the weekend playing golf in Florida, posted on his Truth Social platform: “WE WILL WIN. HANG TOUGH, it won’t be easy.”

President Trump believes his policy will make the US richer, forcing companies to relocate more manufacturing to America and creating jobs.

However, his announcement has shocked stock markets, triggered retaliatory levies from China and sparked fears of a global trade war.

Reality hits that trade war no longer just a threat

China’s announcement of its tariff retaliation came late afternoon on Friday local time.

Most Asian markets closed shortly after – and markets in China, Hong Kong and Taiwan were closed for a public holiday – meaning the scale of the hit did not play out until today.

This morning we are getting a sense of the impact. Dramatic falls across all Asian markets clearly signal a realisation a global trade war is no longer just a threat, but a reality here to stay, and a global recession could yet follow.

Up until Friday, China’s response to Donald Trump’s tariffs had been perceived as restrained and designed to avoid escalation, the markets had reacted accordingly.

But that all changed last week when Mr Trump’s new 34% levy on all Chinese goods was matched by China with an identical tax. Both sit on top of previous tariffs levied, meaning many goods now face rates in excess of 50%.

These are numbers that make most trade between the world’s two biggest economies almost impossible and that will have a global impact.

China has clearly decided any forthcoming pain will have to be managed, and not being seen to be cowed and bullied by Mr Trump is being deemed more important.

But the scale of the retaliation will have further spooked the markets as it makes the prospect of negotiation and retreat increasingly unlikely.

Mr Trump added to the atmosphere of intransigence when he told the media on Sunday the trade deficit with China would need to be addressed before any deal could be done. The complete lack of concern from the White House over the weekend will also not have helped.

While smaller economies like Japan, South Korea, Cambodia and Vietnam are all lining up to attempt to negotiate, there are a lot of nations in that queue.

There is a sense none of this will be easily rectified.

US customs agents began collecting Mr Trump’s baseline 10% tariff on Saturday.

Higher “reciprocal” tariffs of between 11% and 50% – depending on the country – are due to kick in on Wednesday.

Investors and world leaders are unsure whether the US tariffs are here to stay or a negotiating tactic to win concessions from other countries.

Richard Flax, chief investment officer at wealth manager Moneyfarm, said: “I guess there was some hope over the weekend that maybe we would see this as part of the start of a negotiation.

“But the messages that we’ve so far seen suggest that the President Trump is comfortable with the market reaction and that he’s going to continue on this course.

Goldman Sachs has raised the odds of a US recession to 45%, joining other investment banks that have also revised their forecasts.

👉 Follow Trump 100 on your podcast app 👈

In the UK, Sir Keir Starmer has promised “bold changes” and said he would relax rules around electric vehicles as British carmakers deal with a new 25% US tariff on vehicles.

The prime minister said “global trade is being transformed” by President Trump’s actions.

KPMG has warned tariffs on UK exports could see GDP growth fall to 0.8% in 2025 and 2026.

The accountancy firm said higher tariffs on specific categories, such as cars, aluminium and steel, would more than offset the exemption on pharmaceutical exports, leaving the effective tariff rate around 12%.

Yael Selfin, chief economist at KPMG UK, said: “Given the economic impact that tariffs would cause, there is a strong incentive to seek a negotiated settlement that diminishes the need for tariffs.

“The UK automotive manufacturing sector is particularly exposed given the complex supply chains of some producers.”

Business

Trump’s tariffs: A negotiating tactic or the start of an ‘economic nuclear winter’?

Published

19 hours ago

April 7, 2025

admin

Trump's tariffs: A negotiating tactic or the start of an 'economic nuclear winter'?

Traders called this morning a complete bloodbath as the UK’s FTSE 100 joined world indexes in turning red as uncertainty over Donald Trump’s tariffs continued to batter stock markets.

Across Asia and Europe, hundreds of billions have been wiped off companies’ values, particularly in banking and manufacturing.

The cause is not just the imposition of those tariffs (the largest the US has inflicted since the 1930s) and the very obvious drag this will have on global trade and growth, but also the uncertainty of ‘what next?’.

Trump tariffs latest: Musk shares video about ‘essential’ free market

Investors cannot work out if the Trump administration is genuinely wedded to tariffs on this scale, on the proviso that they will help re-shore companies and millions of jobs to the United States.

They don’t know if they are permanent or merely part of a negotiating tactic to address trade imbalances, and for America to use its economic heft to strike better deals.

If Mr Trump is open to deals (the first test comes later in a meeting with the Israeli prime minister), markets will calm, even if the midst of uncertainty hasn’t fully cleared.

However, if this is a genuine rewiring of global trade and the end of globalisation as we know it, markets and economies will continue to get battered.

As one Trump supporter, billionaire Bill Ackman – who opposes the tariffs – put it, President Trump has launched a “global economic war against the whole world” that will usher in an “economic nuclear winter.”

It’s time for all of us to buckle up.