A: Our view on the fund management business is that you either have to be big with a strong distribution network, or you have to be small and aggressive to perform. In Australia, for example, with all the consolidations going on you have to be part of one of the banks to survive. Obviously, you need to have good products, too. But their performance doesn’t have to be fantastic.
If you’re smaller, you have to be very specialized and with excellent performance. Being a medium manager, we believe one of the keys to our future success is to make sure that we don’t get bypassed by investors. By joining the Aberdeen group, we hope to become a more focused and specialized manager at the more knowledge-driven, intelligent end of the fund management market.
Q: How is the deal progressing?
A: The selling process is still subject to regulatory approval in Australia. But they are simply formalities. What is not quite routine is to get approval from the shareholders of our North American funds. EquitiLink has five funds in North America – three in the States and two in Canada. The changing of status of our US funds is subject to approval by shareholders at an extraordinary general meeting on 29 November. Until then, the deal is not completed.
Q: Being an indigenous fund manager, do you worry the name change from EquitiLink to Aberdeen will alienate the Australian market?
A: I think it is actually a positive move that we’ll be having the Aberdeen brand name in an increasingly global environment, enforcing the idea that we’re committed for the long term. Aberdeen is well known for having a strong fund focus and not being part of a wider financial network. If you look at their acquisition record, they are doing it in a very diversified way, adding capabilities to areas where the group wants to develop. Our rebranding will allow us to be seen by investors from a different perspective.
Q: With the acquisition Aberdeen will basically take over your North American market on the one hand, and access the market that EquitiLink built in Australia on the other. How does the deal benefit your shareholders?
A: Aberdeen will take over our North American operation for sure, but I will continue to be responsible for some of our funds there. While we want to develop our North American market we also want to grow our Australian business. As a home-grown manager, it is important for us to be successful in our home market because that’s where we are judged by our peers. If we cannot crack the home market, it’ll be difficult for us to keep good staff. It is also important to have another source of distribution as it will make us more commercially viable.
Q: There will be overlap following the acquisition. How will it affect your staff numbers?
A: We intend to grow the number of staff as well as the business. We employ about 50 people in Australia and five in North America. The number excludes our joint venture with Chifley [a financial planning firm], which employs about 35 people. We have no immediate plan to expand as we believe our current staff level is an appropriate one.
Q: How will the deal affect your Asian investment portfolio?
A: We think it will give us a platform to grow. With the corporate debt market, for instance, they are quasi equities. The analysis that you do on these investments resembles the equity market analysis far more than the analysis on government bond markets. Because Aberdeen in Singapore has analysts studying companies in Asia, it offers a fantastic opportunity for us to expand our credit analysis capability. Also, Aberdeen has been operating in Singapore and Hong Kong for a long time, and we are hoping its connections will allow us to attract more funds.
