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Aberdeen &#39unlikely&#39 to face wave of split-cap court cases

The real estate opportunities investment trust&#39s decision to seek damages from former manager Aberdeen Asset Management is unlikely to spark a wave of legal action, according to analysts Credit Lyonnais.

The trust warned earlier this month that it intended to recover a large proportion of losses totalling £165m and would refuse to pay outstanding management fees to AAM, which it blames for exposing its portfolio so heavily to moribund split-caps.

The action, which could deliver a heavy blow to AAM&#39s chances of recovery and will see the fund manager lose around £6m per year in revenues from the cancellation of its management duties, was seen as potentially the first in a series against AAM and other split-cap managers.

But in its Trustwatch report for April, Credit Lyonnais says Reo&#39s move is unlikely to prompt other trusts to chase managers for compensation.

It says Reo, with assets of more than £400m, is unusual in that it has the financial clout to pursue a claim against AAM.

The report says: “We doubt that this heralds the start of a series of copycat actions from other splits, assuming this one ever goes to court. REO has more financial wherewithal than the average bust split and it seems likely that action will incur substantial legal fees.”

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