Virgin Money in j/v with Scottish fund management giant

● Aberdeen Standard Investments to pay £40m for stake in unit trust arm

Aberdeen Standard Investments (ASI), the fund management arm of Standard Life Aberdeen, is to hook up with Edinburgh-based Virgin Money in a move that will ramp up the bank’s small investor offering.

The joint venture announced yesterday is aimed at fusing Virgin Money’s brand and customer reach with ASI’S asset management expertise and digital technology.

A joint statement from the groups yesterday said the j/v was expected to “transform” the bank’s retail investment arm “driving significant growth in assets under management and capital-light returns”.

Virgin Money currently has more than 200,000 retail investment customers, mainly in unit trusts, and £3.7 billion in assets under management.

The deal, which requires further mutual due diligence, regulatory and other relevant approvals, will be struck by ASI, whose headquarters is also in Edinburgh, buying 50 per cent of Virgin Money Unit Trust Managers for an upfront cash payment of more than £40 million.

ASI and Virgin Money said the tie-up, to be completed by end-2018, will enable the bank “to provide customers with access to a broader range of funds and solutions at a competitive cost.

“The new joint venture provides a considerable opportunity for Virgin Money to develop deeper relationships with its existing customers, and use its brand to attract new customers and deliver significant growth in assets under management”.

Jayne-anne Gadhia, chief executive at Virgin Money, said the combination would be “game-changing” for the bank’s investment arm in the long term.

She added: “This mutually beneficial relationship will give our customers a broader fund choice and the tools and capability to invest for the future with confidence.

“As a result, it offers a compelling proposition for our customers and offers excellent value for our shareholders.”

Martin Gilbert, co-chief executive at ASI, said: “We’re delighted to be partnering with Virgin Money to develop their retail investment business.

“Their customer focus mirrors that of Aberdeen Standard Investments and we look forward to working together and sharing a strong and profitable relationship over many years to come.”

Yesterday’s deal follows a big blow last month to the £11bn merger of Standard Life and Aberdeen Asset Management in 2017, when the group lost a mandate to run £109bn of assets for Lloyds Bank and Scottish Widows.

The lost contract equated to 17 per cent of the group’s funds under management.

Lloyds was said to be unhappy that the money would now be managed by Standard Life, a clear rival to Widows in the life and pensions market.

A week later Standard Life Aberdeen struck a £3.2bn deal to offload its insurance arm to rival Phoenix Group.