ESB sells fund management unit for £7.5m to Aberdeen

ESB has sold ESB Fund Managers, which manages part of the ESB pension fund and other funds, to Aberdeen Asset Management for £7.5 million (€9.5 million). The fund had been put up for sale before Christmas and there were four serious contenders.

Mr Michael Phelan, general manager of ESB Fund Managers, said the acquisition "ends a short period of uncertainty for ESB Fund Managers". It manages £750 million of institutional funds (out of a total pension fund of £2.25 billion) which are invested mainly in Irish equities and euro-zone fixed interest stocks.

The ESB super-annuation fund is the biggest part of the portfolio but it also manages an exempt pension unit trust and five charity funds.

The fund has net assets of £270,000. The consideration "represents good value for ESB International", said Mr Padraig McManus, managing director of ESB International, a subsidiary of ESB.

"The outcome confirms the success of ESB's involvement in the fund management business, which has yielded an excellent financial return to the group."

An ESB spokesman said the group's strategic plan in 1996 envisaged the group concentrating on the energy business.

ESB Fund Managers had been sold because it was non-core to the group's operations.

The remainder of the ESB pension fund is managed by four groups - Bank of Ireland Asset Managers, J P Morgan Investment Managers, Barclays Global Investors and Irish Life Investment Managers.

With ESB Fund Managers under new management, there is likely to be a move out of some of the Irish shares and a greater emphasis on euro stocks, according to industry sources.

The deal will make Aberdeen Ireland's largest independent fund manager with £2.25 billion under management.

The ESB team of five, led by Mr Phelan, will be absorbed by Aberdeen, bringing the number of its employees in Ireland up to nine. Mr Martin Gilbert, chief executive, Aberdeen Asset Management, said the deal would bring far greater prominence for the Aberdeen name in the Irish market and introduce a wider range of opportunities to expand the business.

Aberdeen has had a presence in Ireland since 1991. It set up a Dublin office in 1998 as part of its global strategy to establish a local presence in the regions in which it invests.

ESB Fund Managers was established in 1989, with the main object of managing the portfolio of the ESB pension fund.