How Aberdeen’s Data Centre Bet and Rebrand Revived the Fund Manager

Aberdeen, once one of Britain’s most prominent asset managers, has endured a deeply difficult ten years.

The £11billion tie-up with Standard Life, engineered by ambitious Aberdeen chief Martin Gilbert and his more methodical counterpart Keith Skeoch, appeared flawed almost from the beginning.

Both men eventually departed. Standard Life was later separated and sold to heritage pensions and insurance specialist Phoenix, while Aberdeen went through a succession of experiments. The most notorious was Stephen Bird’s brief rebrand as ‘abrdn’ – a name many people struggled to pronounce, with some joking that it sounded like ‘a burden’.

Jason Windsor, the group’s energetic new chief executive, abandoned the artificial branding and put ‘aberdeen’ back on the company’s letterhead, retaining the lower-case ‘a’ and, notably, avoiding an expensive brand consultancy exercise.

Windsor, who previously held senior roles at Aviva, is now focused on restoring Aberdeen’s relevance in a rapidly changing investment industry.

He has taken a hands-on approach to businesses inherited through earlier deals, including retail investment platform Interactive Investor and the group’s holding in Tritax Management, a specialist in logistics and warehouse assets that manages listed property company Tritax Big Box.

He also stepped in to defend the successful Herald Investment Trust, led by highly regarded technology investor Katie Potts, from an attempted raid by American activist investor Boaz Weinstein’s Saba Capital.

Taken together, the moves indicate that Aberdeen may be rediscovering the boldness that once made it a powerful name in fund management and the wider stock market.

Like many UK asset managers, the company has been forced to adapt as low-cost passive funds, often operated by US-owned groups such as Fidelity, have put pressure on traditional active managers. Aberdeen is also working to slow the withdrawals, or outflows, from its investment funds.

Its recovery strategy has involved reaching a new generation of investors. That effort has helped rebuild income and profit margins, allowing the group to return to profitability after years of losses.

Tritax remains relatively modest beside Aberdeen’s £556billion of assets under management. Yet the timing of the investment has been astute, as logistics facilities and data centres have emerged as some of the most sought-after areas of the commercial property market.

Until recently, the potential value of companies developing sites for data centres was not fully reflected by investors. That has changed dramatically, as demonstrated by Californian property giant Prologis’s £14.3billion bid for British warehouse owner Segro, the UK’s most valuable listed property business.

‘Tritax is one example of how we have been improving the profitability of the group,’ Windsor says.

‘The long-term potential of the logistics and digital infrastructure sector is clear and through our extended ownership we’re well positioned to capitalise on the transformative impact of AI on real estate.’

Aberdeen acquired its first 60 per cent interest in Tritax Management in 2021, increased that holding to 80 per cent in April and plans to own the entire business by 2029.

The deal has established Aberdeen in the fast-growing logistics market, with Tritax’s assets under management approaching £10billion and producing robust revenues.

Tritax Big Box Reit is valued at £4.3billion, almost matching Aberdeen’s own £4.55billion market capitalisation. The comparison underlines just how much room Tritax may still have to expand.

When Aberdeen paid £1.4billion for Interactive Investor in 2022, many saw the purchase as an unusual detour into retail investing for a firm historically associated with institutional and professional clients.

That assessment – one I shared at the time – has not been borne out. Windsor says growth has been ‘very strong’, with Interactive Investor’s customer base reaching 525,000 by June this year.

That is 10 per cent up on the year before, with II reporting a 30 per cent rise in clients with self-investment personal pensions, net inflows of £7.3billion and assets under management of £97.3 billion. 

Windsor says ‘II has impressive growth and plenty more room to continue on that path in the UK’s vibrant wealth market’.

Many clients are transfers from platforms such as private equity-owned Hargreaves Lansdown, which proves more costly for many investors. Pots worth more than £15,000 are the main beneficiaries of the savings, II claims.

As impressive as the add-ons at Aberdeen are, the real turnaround will only come when active investment becomes fashionable again.

Aberdeen has huge expertise in emerging markets and over time seeks to reverse outflows, which hit £4.9billion last year. 

This was countered by inflows of £3.6billion, a net departure of £1.3billion, – up on £900million in the previous year. 

But a 60 per cent rise in the share price in the past two years suggests shareholders believe it is doing something right.