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Aberdeen to Buy FLAG Capital

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Aberdeen Asset Management said Wednesday that it is buying FLAG Capital Management to expand its alternative investment business.

Aberdeen, which has about $491 billion in assets under management, offers institutional and private investors equities, fixed income, property and multi-asset portfolios. FLAG manages private equity and real-asset solutions; it has some $6.3 billion of AUM.

Upon completion of the deal, Aberdeen says its alternatives platform, led by Andrew McCaffery, should have about $21.3 billion in total assets under management. In addition, its global private equity operations will include more than 50 professionals and roughly $15 billion of assets under management.

“Institutional investors are increasingly looking towards alternative asset classes, including private-market allocations, to diversify their portfolios and enhance returns. This transaction is in line with Aberdeen’s strategy of undertaking clear value-added acquisitions that will assist with accelerating business growth in this area,” said Aberdeen CEO Martin Gilbert in a statement.

FLAG supports Aberdeen in two ways, according to Gilbert: “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 U.S. client base, which is a key growth market for Aberdeen.”

The transaction is expected to close in the third quarter, following regulatory approval from the Securities and Futures Commission of Hong Kong and submission of a Hart-Scott-Rodino antitrust filing with the U.S. Department of Justice and the Federal Trade Commission.

For the deal, Pakenham Partners served as financial advisors to Aberdeen, while Berkshire Capital served as financial advisors for FLAG.

“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,” said FLAG CEO Peter Lawrence, in a statement.

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,” Lawrence added.

— Check out Europe Is a ‘Re-Emerging Economy’ for U.S. Investors on ThinkAdvisor.