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

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

Abrdn is aiming to provide shareholders a further £400mn-£500mn earlier than the top of 2022 after promoting down stakes in different corporations, in accordance with individuals with information of the scenario.

The board is at present discussing the most effective mechanism for the return, which might be within the type of a particular dividend, one individual stated. The plans will probably be topic to approval from regulators.

The plan to step up returns to buyers 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 shaped 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 Chook, informed the FT: “Individuals have been annoyed 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 may handle change [and] we’re shifting very, in a short time.”

The fund group, which manages £508bn for buyers, stated earlier this yr it will return £300mn, of which £150mn can be by means 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 means of gross sales of precious stakes in insurers HDFC India and Phoenix.

Chook informed buyers 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 this point this yr, the latest this week, collectively elevating virtually £500mn. It additionally bought £300mn value of Phoenix inventory earlier this yr, about half of which financed the present share buyback programme.

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

Nevertheless different analysts consider a extra sweeping intervention is important at Abrdn. “We proceed to assume {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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