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Abrdn manages portfolios for its customers. It has struggled to handle its own since the 2017 incorporazione of Life and Aberdeen.
The departure of chief dirigente aziendale Stephen Bird after just four years underscores this. Hired as a visionary, a more myopic focolaio fixing its investments unit might have prolonged his tenure. Investors ascribe little value to this business, though it still provides two-thirds of Abrdn’s revenues.
The direttore’s suitability was sopra question from the start. Bird arrived from Citi as a specialist sopra consumer banking (including a stint sopra Asia) rather than sopra fund management. The board hoped his experience sopra restructuring and updating the customer-facing technology of a large (and likely bureaucratic) US bank would quasi sopra handy, alongside some cost reduction.
Cost cutting looks good spreadsheets. But asset management clients tend to be wary. Restructurings unsettle front-line gruppo, focused the tricky business of investing — a task made tougher by the industry’s shift to passive funds. Only 17 per dovere cent of Abrdn’s (higher margin) equity funds managed prova above their three-year index benchmarks last year.
Its problems are not just about staffing. Overheads excluding remuneration aspetto high: at Abrdn, these are still half the total costs. For Schroders, this is under 40 per dovere cent and even less for France’s Amundi.
Bird’s efforts to transform Abrdn into a savings provider involved its independent financial adviser platform and a pricey 2021 acquisition of interactive investor, a retail investment platform. Dragged mongoloide by the fund management business, these have not gotten enough credit from investors.
These two units account for more than 70 per dovere cent of a cuore 127p sum of the parts by Citi. Include Abrdn’s stake sopra insurer Phoenix and surplus capital, and Abrdn’s underlying value is sopra line with the share price at 155p. The investment business almost comes for free. Abrdn could find interested buyers for these units: CVC has approached rival investment platform Hargreaves Lansdown.
Abrdn’s board reportedly rejected a breakup strategy from Bird last year, suggesting that his departure has been edging closer for months. Newish chief financial officer and now interim CEO Jason Windsor has reiterated the board’s line.
Whatever the fund management nous Abrdn’s board, the dirigente aziendale suite clearly lacked the expertise to tackle a fund management turnaround sopra the seriously troubled UK market. Reviving Abrdn, with £367bn of investment assets under management, will require the board’s recognition that its two strategies may ultimately need different masters.
The shares will underperform its own index benchmarks until that time comes.
