Aberdeens CEO Martin Gilbert porträtteras i Hedge World

The Art of the Possible
Aberdeen Asset Management CEO Martin Gilbert collects paintings, enjoys watching his local football team – and has his sights set on the US customer base. SIOBHAN McFADYEN meets him.

THERE’S A WORK of art on a wall at Aberdeen Asset Management’s HQ in Edinburgh that sums up everything you need to know about Martin Gilbert in a few genius brushstrokes. Communication Tools No. 3, by artist David Nealon, is a painting of different sized paint brushes and, while simple in theory, illustrates perfectly that not only is its owner a man who knows how to get his messages across but who also has the utensils to spread them far and wide.

Last year, Gilbert’s firm became the largest independent asset manager in Europe thanks to its 40th acquisition. The purchase of the Scottish Widows Investment Partnership from Lloyds for £550m certainly raised a few eyebrows, with some speculators suggesting the deal would leave AAM open to a hostile takeover bid.

But eight months on Gilbert is not only brushing off that speculation, he is also thrilled about his new strategic partnership with Lloyds, which distributes his products through its global banking network and, in turn, is now a 9.9% shareholder in Aberdeen. “It’s good to have them as a shareholder – both our interests are aligned to grow the business. It was a big strategic move for both of us, but it’s good for the UK and Scotland,” he says.

Buoyed by what AAM’s CEO calls “three blockbuster products in the Asia Pacific, emerging and global equities markets”, he now has the freedom and resources to realise his long-term ambition to conquer a fertile US customer base which is currently holding half the world’s assets.

And capitalising on fertile ground is something Gilbert knows all about. The 58-year-old is a product of a generation sold line of Scottish farmers including his father and mother, who left Aberdeen for Malaysia in the 1950s and stayed there for 35 years, cultivating rubber plantations. He was born and raised in Malaysia and later attended Aberdeen’s Robert Gordon boarding school – and it is clear that his early understanding of geography, coupled with a desire to embrace different cultures, has made him the success he is today despite a serious setback in his fortunes when former employees took his company to the brink of collapse in 2002.

After what has been an extraordinary decade against the backdrop of the worst banking crisis in living memory, AAM has risen from the ashes and now has more than 30 worldwide offices including three US outposts in Miami, Philadelphia and New York – and the firm is hugely serious about its play for US assets.

“The amount of wealth that people have accumulated in America over the past 100 years is incredible among families that most people have never heard of,” says Gilbert, who has just appointed a dynamic duo, in the shape of Andrew Smith and Bev Hendry, to co-head the Americas. “These families owned companies and, of course, there was no income tax in the US at the turn of the century. People made immense fortunes: just look at Carnegie. Of course there are places in America that have done badly recently, for example Detroit – which went from being the wealthiest city in the US to being one of the poorest. But despite that they have picked themselves up and JP Morgan is putting in $100m now.

“We have opened three offices there, including two in the biggest financial hubs – New York and Miami – as well as our largest office in Philadelphia, and that business has grown from $40bn under management to $78bn in five years.”

AAM currently manages £324.5bn, with the majority of those assets under management clients from the Middle East, America, Canada and Switzerland. And as the growth of the US customer base directs a portion of Gilbert’s thinking, so does his incredibly bullish attitude and expert knowledge of the Asian emerging markets, which are continuing to gain traction.

His team have become the go-to guys for investors with a penchant for the east thanks to their unique on-the-ground intelligence. “It was learning about the Far East that allowed us to become a player in the region,” Gilbert says of his company’s 22-year presence there.

“When Hugh Young, our head of equities, suggested we relocate him and his team of one to Singapore in 1992, we made the decision straight away. It was really a stroke of luck. And since then we have built the business into Europe’s largest independent asset manager through a mixture of strong organic growth, performance and acquisitions.”

In the three decades since AAM registered in Scotland as a company, China has increased its GDP per head from an average of $300 to $6,750. And while AAM has an off ce in Shanghai, its interest isn’t solely limited to that region as it gets itself set for action elsewhere.

India’s recent political renaissance under the stewardship of prime minister Narendra Modi is beginning to create an increasing level of interest in a country which, some commentators say, has not seen such strong leadership in the last two decades.

Gilbert added: “I am still a great believer in emerging markets and Asian equities. Asia has a high growth rate in savings, and the wealth is increasing as these countries grow. We’ve been keen on India for a long time, and Malaysia, Singapore and Indonesia. It has stood us in good stead.”

There is no doubting that Gilbert is a fan of all things Scottish, too. His penchant for fine shortbread, Aberdeen Football Club, whisky, his cherished rounds of golf at Royal Aberdeen and his company’s incredible and expertly cultivated collection of home-grown art all bear witness to that.

But he also has allegiances to England, with an appreciation of British Airways – not to mention his second-hand Range Rover and his all-time favourite painting, a fresco by William Dyce depicting the legend of King Arthur and his chivalric virtues of hospitality, generosity, mercy, religion and courtesy, in the Robing Room at the House of Lords.

Gilbert is also, to his credit, a man who has respect for businesses that have continued to thrive in the aftermath of the financial meltdown, like Prudential.

But with the country he is registered to vote in getting set for a historic referendum on independence in September, he goes quiet about which box he’ll tick – though he’s most certainly not in the ‘don’t know’ camp. He is in a unique position that allows him to walk the corridors of power at both Westminster and Holyrood because of his parliamentary advisory responsibilities. And while he counts former chancellor Alistair Darling and ex-foreign secretary Sir Malcolm Rifkind among his cohorts, he also has a great deal of respect for Scottish first minister Alex Salmond, who he describes as “formidable”.

“Scottish people are very proud,” he adds, touching on some of the negative campaign tactics on both sides of the debate, “but there is no point in saying ‘you can’t do this or that’ because it really does cause resentment. It will be really interesting to see what the result is, but I am like everyone else – your heart is Scottish and your head is more pragmatic.

“As a company, we are going to be strictly neutral. Whatever the result, we’d like to keep our headquarters in Scotland, but it’s a very odd referendum in that you don’t actually know what you’re voting for.”

When it comes to the way Gilbert manages his life, it’s very obvious that he’s in the driving seat of a nonstop machine which he describes as “living by splitsecond timing”. To prove it, ask his driver, whom he says he directs using the Google Driving Map app on his iPad, which shows time-wasting traffic jams in real time.

This is a man who really does seem to work seven days a week and admits he doesn’t have time to listen to music or watch films. But he loves his Blackberry, Singapore Airlines’ inflight wifi and his Good app for pleasure. He appreciates any downtime in his schedule back at home, and spends it with his family.

But does he lose sleep for worrying about US financial icon George Soros’ warnings about a hit on the pound given his company’s long view on sterling? Taking a minute to think about the sometimes volatile swings of pretty much all markets, he says: “Hedge fund guys are really smart – so if there is any money to be made, they will be there making it.”

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Diversification is the key
Aberdeen Asset Management’s alternatives business manages more than £11bn across hedge funds, private equity, real estate and infrastructure.

This includes investments in more than 100 hedge funds, with the group’s flagship Fund of Hedge Funds portfolio having outperformed peers and the market over five, 10 and 15 years.

Gilbert believes his diverse attitude towards investments is helping his company outperform others. He says: “The desire to find less traditional sources of return has increased dramatically over recent years. The global financial crisis is still a defining reference point for investors even six years on. More than a decade of broadly flat equity returns and persistent market volatility has amplified the need for more effective diversification.

“Insurers, pension schemes and sovereign wealth funds are all increasing their allocations to hedge funds.

“It is not that investors have been unaware of these alternative sources of return, but they now have greater demand for them. We’re well positioned to help investors specifically allocate to, say, hedge funds or more generally across the alternatives spectrum.”

Portrait of an art-lover There’s no doubt that Gilbert has spent much of his life – save for getting a law degree – pursuing his love of numbers. “I was never going to be a lawyer,” he laughs. “I really love accountancy. I think it’s simple – but it’s interesting how some people are numeric and some people are not.”

But his strong love of art reveals another side of his personality. Last year, AAM commissioned a piece called Sixth Avenue from John Mackechnie, one of Scotland’s leading artists. Mackechnie travelled to the New York office to create photographic screenprints of the vista from the building’s 49th floor, blending photography and printmaking to create a translucent piece that hangs on the wall of AAM’s Edinburgh HQ.

The most treasured work in Gilbert’s own collection is called Kirkcudbright From the Stell, and was painted by banker Harry MacGregor in 1905. “This painting instantly evokes the great charm and tranquillity of Kirkcudbright and the sounding area,” Gilbert says.

“Harry MacGregor captured the wonderful light which attracted so many artists, such as Oppenheimer, Gauld and Guthrie, to the town and led to the setting up of an artists’ community.”

The collection also includes works depicting Scottish farming life, with The Fife Landscape, painted in 1968 by Jack Moncur, paying homage to how generations of Gilbert’s family made their living both at home and abroad.

He explains: “A lot of people from farming backgrounds went out of Aberdeen in the 1950s, especially second sons of farmers. They went abroad to Malaysia and India, and oddly enough they did better than the older brothers who worked at the family farms back home. My father was no exception. A lot of people worked on the rubber plantations, and I was lucky enough to be born out there.”