Aberdeen set to pick property suitor

ABERDEEN Asset Management, the fund manager at the centre of the split-capital investment trust scandal, is within a fortnight of picking a preferred bidder for its property arm - a deal expected to bring in at least £80m.

A private equity group is understood to be front runner to buy Aberdeen Property Investors. Exclusive negotiations are expected to begin soon and Aberdeen today stuck by its promise of a deal by the end of June.

The group slumped to an operating loss of £4.6m in the six months to March, compared with an £18.3m profit last time. But the £54m proceeds from the sale of assets to New Star ensured it was profitable at the pre-tax level.

It slashed the interim dividend from 3.85p to 2p. This was seen as a strong signal it intends to pay a 4p final, making a total of 6p, a hefty yield which would normally strongly underpin the share price.

But the group continues to be overshadowed by worries that it faces costly litigation over the splits affair. Auditors KPMG again alerted shareholders to the danger here, but stopped short of qualifying the accounts. Chief executive Martin Gilbert insisted there was no need to make any provision because the company had 'at all times acted with integrity' and in accordance with City rules.

The slimmed-down group has made annualised cost savings of £40m and also reported that in March it had finally stemmed the outflow of investors' funds.

However, plunging share markets and the withdrawal of funds by disappointed investors has clobbered the group. Funds under management fell from £23.7bn to £20bn and since the period end, Aberdeen has also lost the management contract for Real Estate Opportunities (REO), a split fund now threatening to sue.

'The last six months were another testing period in what has been the longest bear market for 65 years,' Gilbert said. He said Aberdeen would continue to chase REO for unpaid management fees and would robustly defend any legal action from REO.

The investigation by the Financial Services Authority into Aberdeen's role in the splits scandal was continuing and the company was also awaiting a ruling from the Financial Ombudsman Service. Tens of thousands of investors have lost their savings investing in splits managed by Aberdeen.