The merged Standard Life and Aberdeen group would control an impressive total of £660bn in assets, making it one of the UK’s largest fund managers, and while the likes of Romer-Lee say the deal was not “purely defensive”, others have pointed to the need for both firms to diversify in order to protect themselves against the likes of passive investments.
Keith Baird, financial services analyst at Cantor Fitzgerald, said: “The rationale for the deal must be diversification for both Standard Life and Aberdeen.
“Standard Life has had success in growing its institutional business but has problems with GARS and mature insurance books. Aberdeen has a large emerging markets business which has struggled.
“Given the headwinds faced by the asset management industry from passive investing, pricing and regulatory pressures, this looks like a defensive deal.”
A final decision on the deal is due in early April, with Morningstar Investment Management saying it would “monitor the plans with interest”.
Morningstar analyst Mark Preskett confirmed the deal looked like “a reaction to the cost pressures that active management is under from passive investing”.
With almost all agreeing headwinds could push more firms towards the M&A route, the question is, who will be predator, and who will be prey?
