Mitsubishi boost for assured Aberdeen

There can be fewer high risk stocks than financials right now. But some are in better shape than others. Aberdeen Asset Management seems to have a degree of stability and the tie-up with Mitisubishi shows it has big ambitions for the future.

Aberdeen AM

132p+5½p

Questor says: Buy

The fact that the world’s second-largest bank has taken a 10pc stake, with option to extend it to 20pc, gives Aberdeen a huge confidence boost. While Mitsubishi has tie-ups with other funds, the equity stake in this deal means it will make every effort to ensure it succeeds.

And, while equity stakes in other financial services firms are swapping hands with alarming frequency, this deal does not have the hallmarks of a rescue.

Aberdeen’s pre-tax profits for the first half were actually up on 2007, as was the dividend. The major risk going forward is that a large number of big redemptions could cripple the fund, though so far the signs are good. Forging ahead with big name partners such as Mitsubishi bank sends a clear signal that Aberdeen is safe and secure.

The deal will give Aberdeen rapid entry into Japan, a market it has long coveted but found difficult to penetrate. An army of 300 Mitsubushi salesmen will now be able to start flogging Aberdeen’s products to the second-largest pension market in the world, with assets estimated at $3,084bn. Japanese institutional investors’ growing appetite to place investments overseas should also benefit Aberdeen, with its strong record in global and emerging markets equities.

However, Mitsubishi will take a cut of everything it sells on Aberdeen’s behalf and, crucially, figures on the fee sharing arrangement are missing from the deal announcement. Nevertheless, the stock looks attractively valued on current metrics.

In 1859, Aberdonian Thomas Glover set off for Japan where he set up a business that would become a founding pillar of Mitsubishi. This deal could prove equally fortuitous. Buy.