Martin Gilbert’s second act began with an Abu Dhabi fire department and a trial.
After three decades of founding Aberdeen Asset Management and merging with Standard Life, the fund manager has embarked on a new adventure from an unlikely base far from the world of finance.
AssetCo started in 2003 as a fire truck hirer for the London Fire Department and private emergency service provider in the United Arab Emirates. She owned a reel manufacturer and a white-water rafting course in Northampton, before selling her UK fire fleet for £2 in 2012.
Christopher Mills, founder of Harwood Capital, who was on the company’s board and had been friends with Gilbert for decades, suggested Gilbert use the cash shell as an investment vehicle for his post-Aberdeen ambitions.
Gilbert accepted the offer in early 2021, shortly after leaving the presidency of what is now Abrn. His goal was to build a fund manager who he felt would not be “burdened by legacy issues, constraints or complexities.”
Drawing comparisons to another voracious dealmaker, Sir Martin Sorrell, who took an unloved shopping basket maker – Wire and Plastic Products – and used it to build advertising giant WPP Group over three decades, Gilbert said. quickly started buying small asset management boutiques. Its initial funds of £31million came from the settlement of a decade-old legal dispute between the former emergency service provider and its auditor, Grant Thornton.
In January, he completed his biggest deal since leaving Abrn. AssetCo has announced it will buy fund manager River & Mercantile for just under £100m, which will add $3.3bn to its assets under management. A month later, the band made a £2.8m offer for Revera, taking their deal count to five.
But already critics point to the challenges facing AssetCo. They raised concerns that the businesses Gilbert has brought together so far are disjointed, undersized, and the synergies are unclear.
The company has £9.6bn under management excluding R&M – a small fraction of the £464bn Abrdn had when Gilbert left.
Many of its businesses have yet to produce returns – R&M revealed this week that it fell back to a loss for the second half of 2021 due to the costs incurred to sell its solutions business, while AssetCo holds a stake majority in the ETF specialist, Rize, which is also loss-making. Saracen, which he bought last year, is just profitable.
AssetCo’s historic operations in the United Arab Emirates have mostly been scaled back, but its Abu Dhabi offices are still open, overseen by Tudor Davies, the company’s former chairman.
The company’s 30% stake in Parmenion, a technology and solutions company controlled by private equity group Preservation Capital, has performed well and is the most valuable in the portfolio.
The business is still in its infancy and Gilbert, who co-founded Aberdeen Asset Management in 1983 and helped build it from assets under management of just £70m, has big ambitions for its last company.
“We’ve focused on consolidating small shops that are very good at managing money,” Gilbert told the Financial Times. “I think we could make a big difference for these companies by adding a bit of our expertise. They don’t have legacy issues in their systems, they’re small and nimble. »
An asset management veteran said he expects Gilbert to continue buying “additional things from which he can generate cost savings” before AssetCo builds “enough big enough to buy complementary businesses that you can then rationalize”.
“I think Martin is someone to look at as a much better business builder than a creator of shareholder value,” the person added.
The serial networker
A prolific trader and a prominent figure in city circles, Gilbert is described as knowing “everyone on the FTSE 100” by a fellow executive.
He has golfed with Donald Trump and sits on the board of flamboyant German entrepreneur Lars Windhorst’s Tennor Holdings, while also holding board seats at companies including Glencore and Revolut. “Boards use him for his connections and network,” the executive said.
There are frequent overlaps between Gilbert’s past and present business interests. He joined the R&M board as vice chairman in January 2021, a year before AssetCo bought him. Alex Hoctor-Duncan, its managing director, was previously a senior executive at Aberdeen. Gilbert has pulled out of negotiations, AssetCo said.
Gilbert also bought Parmenion while running Aberdeen and is chairman of Toscafund, one of AssetCo’s biggest investors.
AssetCo has honed in on its most controversial acquisition target last year: H2O Asset Management, a move that exposed Gilbert’s complex network of business connections.
Gilbert approached Natixis to see if the French bank would sell its majority stake in the investment firm, which is under investigation by several financial regulators and has suffered significant losses on a mispriced bet this year. on the Russian rouble, according to two people briefed on the matter.
At the time, a deal Natixis made to sell its stake to H2O management was falling under regulatory scrutiny. But the French bank was not interested in selling to AssetCo and finalized its management sale this month after making changes to appease regulators.
Gilbert denies that discussions took place. “There is absolutely no truth to that,” he told the FT. “Although I suspect the problem is that I knew Tim Ryan [chief executive of Natixis Investment Managers] pretty much from its Generali days.
Natixis declined to comment.
If an agreement between AssetCo and H2O had been reached, it would have been fraught with pitfalls of potential conflicts of interest.
Gilbert is chairman of the advisory board of Windhorst’s Tennor Holding, which has borrowed billions of euros from H2O that it has yet to repay in full.
H2O, whose chief investment officer also sits on Tennor’s board, recently suffered steep writedowns on its holdings of Windhorst-linked bonds, after agreeing to help the German financier avoid bankruptcy.
Gilbert is also a regular at social events organized by the enigmatic entrepreneur. He was on the guest list for a private dinner hosted by Windhorst at the Four Seasons Hotel in London in November to introduce his social circle to his new recruit: the former deputy minister of security in Afghanistan, General Koshal Sadat.
Gilbert has no qualms about his role at Tennor. “My role there is to make sure bondholders are taken care of, which has been interesting,” he said. “We’re doing our best to do what we can, but it’s a typical credit crunch situation when the money is drying up.”
“I think that he [Windhorst] seriously doing its best to repay its creditors,” he added.
A checkered record
A London executive who has known Gilbert for years said his “formula for success [is] buy cheap, cut costs and keep growing.
But Gilbert’s style of growing through acquisition and nonchalance toward convention didn’t always succeed. Aberdeen was accused of mis-selling trusts to investors in the 2002 split-capitalization scandal, costing thousands of investors millions of pounds. The company reached an agreement with the city regulator to pay a £78million settlement in 2004.
The 2017 merger between Aberdeen and Standard Life, of which he was a key architect, is widely seen as a disappointment. The company has suffered net outflows from the assets it manages every year since 2016, and its combined market capitalization has fallen from $11 billion at the time of the merger to around $4.7 billion.
Fellow leaders said Gilbert’s time was stretched between his many interests, although they praised his strategic acumen. “He’s a great board member because he doesn’t focus on the details, he focuses on the big picture,” said a person who worked closely with him. “He assesses problems like a pugilist.”
For now, Gilbert will focus on finding the bargains for AssetCo that will prove early critics wrong.
“He will continue to do business until the day he dies,” the London executive said.
“He is a veteran of the asset management industry. His record isn’t perfect, but no one’s record is perfect.
Additional reporting by Samuel Agini