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magazineStandard Life Aberdeen looks set to bring returns
The FTSE 100 is now home to second largest asset manager in Europe behind France’s Amundi, Standard Life Aberdeen (SLA). The combination of Standard Life and Aberdeen Asset Management is worth around £12bn.
There is typically some fallout when mergers of this size take place, the loss of David Cumming, Standard Life’s head of equities in March was a blow.
But this tie-up makes sense and not just from a defensive point of view as a counter to the increasing use of low cost passive funds. Aberdeen has a focus on emerging markets which are making a comeback, reflected in this year’s rally of the MSCI Emerging Market Index.
Standard Life’s standout Global Absolute Return Strategies (GARS) has seen its redemptions slow down and this one fund makes up for £24bn of assets under management.
Analysts’ view
RBC Capital Markets is a fan of Standard Life Aberdeen, saying it has a favourable valuation. Using RBC’s figures, the company trades on forecasted 2017 price to earnings ratio of 13.7 times, while also paying a healthy dividend yield of 5%.
Numis upgrades the company’s earnings per share projections for 2018 by 3% to 34.6p largely due to Standard Life’s interim results earnings beat. It also raises its target price to 520p implying 20% upside.
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