A KEY shareholder in Aberdeen Asset Management is considering a public flotation in a move designed to provide it with fresh currency to make major acquisitions.

Followers claim that a share issue would value the Lansdowne Partners hedge fund group at comfortably more than £1 billion, compared with the Scottish company's stock-market value of just more than £925 million.

Lansdowne has owned 10.4% of AAM for some time and has described it as a "passive" investment.

Its wealthy chief executive Paul Ruddock, who is reported to have earned at least £75m last year, told a recent San Francisco conference that an internal debate was taking place over the possible flotation which would also provide another way of compensating partners and managers.

Among its financial coups, Lansdowne is said to have netted £100m from short sales of Northern Rock shares ahead of its collapse, which is slightly more than the £95m worth of its AAM shareholding. Morgan Stanley, which owns 19% of Lansdowne, has an additional 3% shareholding in the Scottish fund manager.

The biggest shareholders, though, are fellow hedge fund managers at Toscafund, who have built up a 16.12% stake in the past few weeks, giving them 104.99m voting rights, and are already sitting on a near £20m profit on their investment following a rise in the AAM share price.

Toscafund is part of a group whose directors include former Royal Bank of Scotland chairman George Mathewson and retired ANZ Bank chief executive John McFarlane.

Its chief executive Martin Hughes received an estimated pay packet of between £50m and £75m last year, according to hedge fund experts at Trader Monthly.

AAM chief executive Martin Gilbert, whose own remuneration package worked out at £3m last year, has welcomed both hedge funds to his shareholder lists.

One source claimed they were "engaged investors who are supportive of the management and knowledgeable of the industry".

But directors are equally aware that hedge fund managers only earn their bonuses if they can achieve returns of at least 20% annually from their investments and can quickly engineer changes at the top if performance should falter.

The powerful investors should gain some assurances on Tuesday when AAM is expected to deliver a resilient set of interim figures in the face of the turmoil in financial and property markets caused by the US debts crisis and the credit crunch.

Top-rated analyst Bruce Hamilton at Morgan Stanley, who recently downgraded his estimates by 10% for the year, believes the company may have managed to keep total assets under management to just above the £100 billion mark despite losses early in 2008 and expects half-year profits to hold at around £50m, up from £43.6m at this time last year, although marginally lower than the figures achieved in the second half of 2007.

The performance was helped by the group's aversion to risk after being brought to its knees by the split-capital investment trust debacle five years ago and managers stayed clear of danger areas such as American subprime mortgages, China and UK commercial properties.

They also continued to steer well clear of the notoriously fickle mass-market sector to concentrate on pension funds and other global institutions, particularly in Asia and the US.

Even so, directors are likely to admit that margins have been pinched by the outflow of funds from equity markets in the early months of this year before a partial recovery in April.

Brokers believe that this could lead to a further round of rationalisations following the decision to move Glasgow Investment Trust to Edinburgh although any moves would be unlikely to have a significant impact until next year.

Directors are expected to underline their commitment to further bolt-on acquisitions following their recent £79m purchase of a European property fund from Dresdner Bank. There could also be news of plans to return to the UK commercial property sector latter this year and a new fixed-interest offering to take advantage of the slide in values in both markets.

Analysts will be particularly intrigued to hear of any plans to become involved in its own hedge fund after AAM held discussions with Steve Ilott, its former head of fixed interest investments, about backing a new alternative asset management business.