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Standard Aberdeen: analysts eye investment trust overlap

Standard Aberdeen: analysts eye investment trust overlap

Aberdeen Asset Management's (ADN)  two UK equity income investment trusts and its Aberdeen Private Equity (APEF) closed-ended fund could be vulnerable to mergers after the fund group agreed a £11 billion takeover by insurer Standard Life (SL), according to Numis.

Analysts at Numis said most of the two dozen investment trusts run by both groups were likely to emerge unscathed from the merger, which could spark a raft of consolidation within both groups' open-ended fund ranges.

But they highlighted crossover among some of the trusts run by both groups. 'We do not envisage any significant impact from the merger on most of the individual investment trusts (which have independent boards), although there are some areas of overlap for the combined group,' they said.

'It will run three UK equity income funds: Dunedin Income Growth (DIG), Murray Income (MUT) and Standard Life Equity Income (SLET). However, the Standard Life vehicle, managed by Thomas Moore, is differentiated by an all-cap approach, and there is a greater argument in our view to merge the two Aberdeen funds,' they said.

'It will run two funds of private equity funds: in our view, Aberdeen Private Equity (APEF) is sub-scale, but a merger with Standard Life Private Equity (SLPE) would not be straightforward given the nature of the portfolios and the fact that both funds are trading at discounts to net asset value.'

But they dismissed the chances of Aberdeen's diversified growth team, which investments in specialist investment trusts, being subsumed by the team behind Standard Life's £25 billion Global Absolute Return Strategies fund. 'The investment approaches are very different, and we believe that the teams are likely to remain separate entities,' they said.

While Standard Life is the dominant player in the merger, Aberdeen has a much larger investment trust range, with 20 closed-ended funds accounting for around £6.3 billion of assets. Standard Life runs four investment trusts with net assets of £1.3 billion.

Combined investment trust range

Name Sector Sub-sector Net assets (£m) Premium (+) / discount (-)
Aberdeen Asset Management 6,258
Aberdeen New Dawn Asia Pacific Ex Japan 244 -13.9
Edinburgh Dragon Asia Pacific Ex Japan 620 -12.3
Aberdeen Asian Income Asia Pacific Income 386 -8
Aberdeen New India Asia Pacific India Equity 242 -12.2
Aberdeen New Thai Asia Pacific Other Countries 94 -16.3
Aberdeen Asian Smaller Cos Asia Pacific Smaller Company 354 -14.2
Aberdeen Emerging Markets Emerging Markets Global 278 -14.8
Aberdeen Frontier Markets Emerging Markets Global 112 -9.5
Aberdeen Latin American Income Emerging Markets Latin America Regional 47 -11.9
Aberdeen Diversified Inc & Gwth Global Absolute Return 302 -8.1
Murray International Global Equity Income 1,526 -1.5
Aberdeen Japan Japan General 86 -9.5
North American Income North America General 365 -8.8
Private Equity Fund of Funds 130 -20.9
Aberdeen UK Tracker   UK All Companies 341 -6.2
Shires Income UK Equity & Bond Income 71 -12
UK Equity Income 383 -10.1
UK Equity Income 520 -7.3
Aberdeen Smaller Companies Income UK High Income SmCos 50 -18.6
Dunedin Smaller Cos UK Smaller Company 106 -16.8
Standard Life Investments 1,271
Private Equity Fund of Funds 460 -12.7
Standard Life Inv Property Inc Property UK 333 4.8
UK Equity Income 204 -7.2
Standard Life UK Smaller UK Smaller Company 274 -3.2

Source: Numis Securities

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