When seeking support for a union in Scotland, it helps to start from a position of strength.
Just ask the Scottish Labour party’s election candidates, who are currently fighting a campaign in favour of remaining in a United Kingdom. On the doorstep every day, their message can be cruelly undermined by two awkward questions: nationally, what is the ratio of giant pandas to Labour MPs; and how many of the latter does it take to change a lightbulb? Being forced to answer “2 to 1” and “All of them” must be dispiriting (although they could hit back with: “At least our MP would change the lightbulb, rather than sitting in the dark and blaming the English”).
Just ask Martin Gilbert of Aberdeen Asset Management, too, who is currently trying to convince shareholders in Edinburgh’s Standard Life that their merger won’t create a disunited fiefdom. On every quarterly results day, his message can be equally undermined by two awkward questions: globally, what were the net outflows from your funds; and will the last star fund manager to leave the business please turn out the lights? Being forced to answer “£2.9bn” and “hey, they’re all good guys” may not be immediately convincing.
But while Tuesday’s half-year results did indeed show a 16th consecutive quarter of clients withdrawing money, it seems that Aberdeen’s standing in the opinion polls is looking a bit stronger.
As the group was quick to note, the pace of outflows is slowing, with that £2.9bn representing a big drop from £10.5bn in the previous quarter. Given that around £2bn each time are natural outflows from closed insurance books, this was Aberdeen’s best quarter for four years — not bad with the merger putting a lot of new business is on hold.
In fact, Aberdeen now appears to have found a more compelling message for all constituents.
For shareholders in Standard Life — some of whom felt they were conceding too much to a shrinking merger partner — Aberdeen’s £70m of cost savings should inspire a vote of confidence in £200m of promised merger synergies. Its savings may also assuage concerns that the deal’s benefits will be harder to realise with Standard Life chairman, Sir Gerry Grimstone, having to devote time to chairing Barclays’ non-ringfenced bank.
For employees at Standard Life, evidence that Aberdeen’s more entrepreneurial culture can actually produce results — rather than clashing with the Edinburgh’s group’s more conservative approach — can only help.
And for both groups’ fund managers, as well as clients, a £35m “retention pot” — a share bonus for managers staying two years — may provide that extra reassurance on continuity that a co-chief executive structure is yet to. Not only that, it’s cheap: at less than 1 per cent of the £11bn deal, it costs less than all the advisers’ and investment bankers’ fees. So, unlike the deposits paid by some Scottish Labour candidates, it’s money well spent.
Falklands’ new local hero
What plays well with film audiences works badly for shareholders? Take the saga of the Falkland Islands Holding company. For a moment, it looked like a 21st century version of Local Hero, Bill Forsyth’s 1980s romcom in which a US oil tycoon tries to buy up a remote fishing outpost in Scotland to build a refinery. Windswept villagers charm and outsmart the dealmaker, and the film ends with the tycoon constructing a marine research centre instead.
Last month, FIH — the biggest landowner in the Falkland Islands — saw off two approaches by big biz. The Rowland family — headed by David, property tycoon and Tory donor — abandoned its 300p a share bid after failing to secure support from enough shareholders. Dolphin Fund, the vehicle of Eduardo Elsztain, Argentina’s biggest real estate developer, gave up after the Falkland Islands Government pointed out that it ultimately controlled land ownership.
But there was no feelgood factor. Now, Edmund Rowland, son of David, has quit as FIH’s chairman and sold his clan’s 29 per cent stake to a trust controlled by the family of Jerry Zucker. But those hoping this presages a Hollywood ending will be disappointed again. This is not the film-maker Jerry Zucker, famous for such hits as Big Business, Ruthless People and Airplane!. This is the late Jerry Zucker whose family runs the conglomerate Intertech.
FIH shares have fallen below 300p, leaving shareholders and islanders to see what plans the Zucker family has for the business. Not quite a romcom.
Bovis: help yourself
If evidence of a two-speed housing market lifted Bovis shares 1.6 per cent, how high did they rise in a three-speed market? No, not 2.4 per cent. On news of reservations slowing a quarter, Bovis shares were up 3.1 per cent at one point on Tuesday. Welcome to the maths of the government’s “Help to Buy” scheme.
FIH: kate.burgess@ft.com