Fund supervisor Abrdn plans payout to shareholders of as much as £500mn

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Struggling fund supervisor Abrdn plans to return as much as £500mn to shareholders in an try to go off a revolt after its humiliating relegation from the FTSE 100 earlier this month.

Abrdn is aiming to present shareholders an extra £400mn-£500mn earlier than the tip of 2022 after promoting down stakes in different corporations, in keeping with folks with data of the scenario.

The board is presently discussing one of the best mechanism for the return, which may very well be within the type of a particular dividend, one particular person mentioned. The plans will probably be topic to approval from regulators.

The plan to step up returns to traders comes within the wake of Abrdn’s share value plunging over 40 per cent in 2022, resulting in its demotion from the UK’s blue-chip index for the primary time for the reason that firm was fashioned with the 2017 merger between Aberdeen Asset Administration and Commonplace Life. Within the first half, Abrdn swung to a £320mn loss.

Final month, chief govt Stephen Hen, instructed the FT: “Folks have been pissed off by the tempo of change 5 years after the merger, however I’ve been right here since September 2020. I can solely transfer as rapidly as you’ll be able to handle change [and] we’re transferring very, in a short time.”

The fund group, which manages £508bn for traders, mentioned earlier this 12 months it might return £300mn, of which £150mn could be by way of a share buyback. The £400mn-£500mn payout is anticipated to incorporate the remaining £150mn that’s but to be distributed.

Abrdn has constructed up appreciable capital buffers by way of gross sales of precious stakes in insurers HDFC India and Phoenix.

Hen instructed traders in August that he would “proceed to return capital in extra of enterprise wants as additional stake gross sales are realised”. 

The corporate has bought two stakes in HDFC to date this 12 months, the newest this week, collectively elevating virtually £500mn. It additionally bought £300mn price of Phoenix inventory earlier this 12 months, about half of which financed the prevailing share buyback programme.

The stake liquidations will probably be essential to assist Abrdn keep its capital buffers, analyst Mandeep Jagpal at RBC mentioned in a notice, including that the corporate’s “excessive proportion of structural prices relative to friends leaves . . . profitability extra prone to market downturns than friends”.

Nevertheless different analysts consider a extra sweeping intervention is critical at Abrdn. “We proceed to suppose {that a} extra radical technique is required to show the group round and maximise worth, such because the break-up of the group or sale of the group in full,” David McCann at Numis wrote.

Abrdn declined to remark.

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