What is going on at Abrdn? A rundown of the company’s troubles
Abrdn has been getting bad headline after bad headline in recent weeks.
The firm’s stock price down more than 70 per cent since its peak in 2015, and crashed 29 per cent over August last year alone.
The bad news for the firm continued this week, as the Financial Times reported that Harris Associates, a high profile shareholder in Abrdn, had sold its position in the company, saying that they had lost faith in its management.
David Herro, deputy chair of Harris Associates, said that Abrdn had a “lack [of] strong product with good track record”, while suggesting that the firm had overpaid in its £1.5bn purchase of Interactive Investor.
Harris Associates has held a stake in the firm since 2017 when it was Aberdeen Asset Management, and was a top 30 shareholder until 2022, when it began to cut its position.
Additionally, Virgin Money today said it would be buying out Abrdn’s 50 per cent stake in the joint venture between the two and take full ownership of it.
Abrdn also sold off its US and European private equity arms last year.
The image of a company strapped for cash was solidified last month as the firm said it would be making sharp cost-cutting measures, announcing that it would be cutting 500 jobs as part of a new £150m profit saving programme, while scaling down its parental leave allowances and redundancy pay.
Even last week, the Financial Times reported the firm was considering dropping some of its Bloomberg terminals, known as the backbone of the investment industry, due to their cost.
In its most recent trading update, Abrdn revealed customers withdrew £6.5bn of their money from the firm in the first half of 2023 and £12.4bn in the second half, adding to the pain of £37.3bn in outflows throughout 2022.
Outflows have become so bad that last year it was also forced to shut its once-mighty Global Absolute Return Strategies after assets dwindled from the tens of billions to just £1.4bn.
Additionally, only 41 per cent of the firm’s total assets under management outperformed their benchmark over one year across the business, though this improved slightly to 58 per cent over three years, according to data from the first half of the year.
The firm is due to release its full-year results for 2023 on 27 February.
Analysts and shareholders have been critical of the group’s management, arguing that they need to do more to turn the fortunes of the firm around.
In November, it was reported that chief executive Stephen Bird was advocating to the board that it should sell its £368bn investment management division.
Numis analyst David McCann has constantly called for “a more radical strategy” for the group, suggesting breaking it up or pursuing a sale.
Panmure Gordon analysts have also argued that “something has to change” at the firm, stating that the board needed “to step up”, and pointed to the significant gap between the firm’s market cap and the value of its assets.
Meanwhile, at its 2023 annual general meeting, the firm received significant pushback from shareholders, with five resolutions gaining less than 80 per cent of votes cast in their favour.
Investors will certainly be paying close attention to the firm’s full-year results to see what the future holds.