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Toscafund sells Aberdeen stake to Japanese

Date: Monday, October 5, 2009
Author: Helia Ebrahimi, Telegraph

Toscafund, which earlier this year came under pressure as investors withdrew their cash, has halved its stake in Aberdeen Asset Management.

The hedge fund, run by Martin Hughes, has slashed its shareholding in Aberdeen, which ran as high as 25pc at one stage last year, from 18pc to 9pc. It is unclear whether Toscafund has made a profit on the sale with Aberdeen's share price closing yesterday at 148.7p, against a low of 80p last November.

Mitsubishi, the Japanese bank which was once touted as a potential predator for Aberdeen, in understood to have picked up Toscafund's stake. Mitsubishi is now the second biggest shareholder with almost 19pc.

Although Toscafund made a return of 40.3pc in the first eight months of this year, in 2008 it lost more than half its value, and it is thought that the fund which at its height had $8bn of assets under management now looks after closer to $4bn. In a letter earlier this year, Mr Hughes asked investors to think again about withdrawing their money, saying the potential of Aberdeen, its largest single investment, was a strong reason to

Toscafund started building its stake in Aberdeen with a 9.8pc holding in March last year, with sources suggesting that Mr Hughes planned to start a boutique bank before the market turned against him. After its restructuring, however, Toscafund split its business into a liquidation fund and a smaller continued investment fund. Mr Hughes runs the first portfolio which is selling down stakes, including Aberdeen, to cash out shareholders.

Mr Hughes backed Aberdeen's acquisition of Credit Suisse's asset management business late last year. In return, the Swiss Bank took a 24pc stake in the Scottish fund manager.

Toscafund's decision to exit such a key investment has raised concerns the hedge fund could be under renewed pressure from investors, with other calls on its cash including a current 100m rights issue call from builder Redrow where it has a 20.5pc stake.