Aberdeen swoops for £4bn US alternatives business

Aberdeen Asset Management has bought £4.1bn US private equity and real assets manager Flag Capital Management in a move the firm said will improve its hedge fund, property, private markets, infrastructure and pan-alternative offerings.

The deal will see Aberdeen’s alternative assets under management swell to $21.3bn, a division overseen by global head of alternatives Andrew McCaffery.

Flag Capital has offices in the US and Hong Kong, with existing private equity, venture capital and real assets teams.

The deal will also help Aberdeen to expand its presence in the US, where it has made a number of acquisitions in recent years.

The deal comes during a period where Aberdeen has struggled with outflows. In the six months to the end of March, net outflows from funds hit £11bn, although it still managed to grow profits and assets in the same period.

Commenting on the acquisition, Aberdeen chief executive Martin Gilbert, said: “Initially, it strengthens further our private market capability by bringing additional Asian expertise and new U.S. resource. This will also benefit our overall pan-alternatives platform. Secondly, Flag deepens and expands our US client base, which is a key growth market for Aberdeen.”

Peter Lawrence, chief executive of FLAG, added: “We at FLAG are thrilled to be joining Aberdeen, not only because of its reputation and position as one of the leading global asset management firms, but also because of the clear cultural fit of our two organizations. We believe the combination serves the interests of all of our constituents, particularly our limited partners and the talented team of professionals that have built FLAG into the high-achieving, high integrity firm that attracted Aberdeen in the first place. Simply put, we can think of no better or more appropriate future for all involved. As integral members of Aberdeen’s private markets solutions team, we’re excited to deliver a truly global array of private capital solutions for our investors.”

The deal is expected to close in the third quarter, subject to regulatory approval.

Pakenham Partners served as financial advisers to Aberdeen on the transaction, while Berkshire Capital served as financial advisors for FLAG.