CRISIS FOR BIRD AT ABRDN

The market downturn has hit 200-year-old asset manager more than its rivals. Simon Foy reports

When Stephen Bird took the reins of struggling asset manager Standard Life Aberdeen in September 2020, he noted that “few companies survive into their third century”.

The business, which traces its roots back to 1825, was grappling with a period of decline following a botched merger of two bastions of the financial services world – Aberdeen Asset Management and former mutual Standard Life – and a failed co-leadership experiment under Martin Gilbert and Keith Skeoch.

Bird, who styled himself as the “reset guy”, was drafted in to reverse the fortunes of the blue-chip money manager, which had seen assets under management haemorrhage from £670bn at the time of the 2017 merger to £512bn when the Scot joined.

Two years on, and Bird’s masterplan looks more like relegation than reset. City analysts are calling for a radical overhaul of the business, including a sale or break-up, and raising questions about Bird’s own position.

It begs the question: will the company be around to ring in its 200th year in its current form? And, even if it is, will Bird still be in post to see it?

Bird started his career as a graduate trainee at British Steel in the early 1980s before moving into the financial services sector where he spent two decades climbing the ranks at Citigroup, eventually rising to lead its global consumer bank.

A newcomer to fund management, Bird represented a break from the past with no tribal alliances to SLA’S heritage brands. The board wanted to start a new chapter. One of his first big decisions on arrival was to rebrand Standard Life Aberdeen as abrdn.

“Good brands get noticed, great brands start a conversation and we’ve started a conversation,” Bird declared at the time. That’s one way of putting it. The rebrand was met with widespread derision. The Financial Times’s waggish blog Alphaville said the company had been “disemvoweled” while others took to Twitter to mock the new name.

A senior insider insists that the company was pleased with the amount of publicity the rebranding received, despite the mockery. But it has done little to arrest the company’s decline. In August, it posted a £320m half-year loss. Assets under management fell to £508bn at the end of June from £542bn in the previous year, as investors fled amid market turmoil triggered by Russia’s invasion of Ukraine.

Mandeep Jagpal, an analyst at RBC Capital Markets, says: “The company has experienced continued outflows from its core asset management segment. The downturn came too soon before Bird’s three year strategy could be fully executed.”

While the slump has affected the industry as a whole, Jagpal adds: “Abrdn has the highest structural cost base among its peers, making it less flexible and more susceptible to downturns.”

More pain could be on the way for its employees. Another City analyst says: “The only way for abrdn to effectively reduce its cost base is to fire people. Cuts are inevitable.”

The company cut 500 jobs last year and is expected to let the same number go in its current financial year.

Abrdn’s share price has plummeted by nearly 60pc in the past 18 months to a record low, leading to it crashing out of the FTSE 100 in August.

The company’s weak performance has also made it a target for shortsellers, with Ken Griffin’s Citadel and asset manager Blackrock betting that abrdn’s stock is set to fall further still.

“The guys betting against it are experts in the sector … So if you were management you would definitely be worried,” says one analyst.

In a bid to keep investors on side, the struggling fund manager is reportedly planning to return around £500m to shareholders, which analysts say would come from recent stake sales in joint ventures the company has in India.

One of Bird’s big strategic moves was to snap up investment platform Interactive Investor for £1.5bn last year as part of a plan to create a defined wealth unit within the business and digitise. But the continued poor performance has led to calls for a more radical shake-up of the company. In fact, the City is pushing for spin-offs rather than empire building.

An analyst says: “They could split the platform and advice business away from the investment arm pretty cleanly. But the problem is that I don’t know who would snap up the asset management unit, which is trading at a very low valuation.”

A spokesman for abrdn said: “We are executing a comprehensive turnaround plan at pace – against the backdrop of extremely challenging market conditions. Today, abrdn is a very different company to what it was when the new management team joined just two years ago – not least thanks to the acquisition of Interactive Investor, which has diversified our revenues and reduced our exposure to market volatility. We know from our staff engagement that 77pc of our staff buy into the vision.”

The company’s struggles have invariably shone a light on Bird’s position as chief executive.

One City source says: “There’s going to be a lot of pressure on Bird and whoever appointed him if he can’t turn things around.”