Abrdn is poised to rejoin the FTSE 100 index after a sharp rally in its share price, helped by a planned return of capital to investors.
The investment manager’s stock has risen 35 per cent since August when it was dropped from the index, the first time it had not been included in the top table of UK companies since it was formed through the merger between Standard Life and Aberdeen Asset Management in 2017.
Data from FTSE Russell indicate that the investment group will rejoin the list of blue-chip stocks when the index rebalancing is finalised next week.
The recent surge in the share price has restored the group’s market capitalisation to $4.1bn, although it is still down 20 per cent this year, while the overall index has largely erased losses from earlier in 2022.
The company’s share price had declined by about 40 per cent from the start of the year to the end of August, which was part of a broader market sell-off.
Active investment managers have also struggled with performance and outflows because of longer term worries about their ability to compete against cheap, passive alternatives.
However, Abrdn’s problems were viewed as more pronounced than its peers, as investors questioned its investment performance and the wisdom of building out a wealth platform business by acquiring Interactive Investor near the top of the market.
The company, which has £508bn under management, reported a pre-tax loss of £320mn in the first half of the year.
However, efforts by executives to sell the new strategy, the completion of the Interactive Investor transaction, efforts to rationalise underperforming funds and the announcement of a chunky capital return programme appears to have helped turn its fortunes round.
“People have been frustrated by the pace of change five years after the merger but I’ve been here since September 2020. I can only move as quickly as you can manage change [and] we are moving very, very quickly,” Abrdn chief executive Stephen Bird told the Financial Times following its first-half earnings announcement.
The other expected FTSE 100 addition, which will be confirmed at market close next Tuesday, is Scottish engineering group Weir Group, while Dechra Pharmaceuticals and Harbour Energy are slated for relegation.
Abrdn declined to comment.