Aberdeen will pay an initial £550m in shares for SWIP, followed by a performance-related payment of up to £100m in cash over the next five years.

The FTSE 100-listed asset manager is to form a strategic partnership with Lloyds, with the state-backed bank taking a 9.9% stake in Aberdeen due to the structure of the deal.

The announcement sent Aberdeen shares 12% higher to 476p at the start of trading this morning.

Today’s deal includes SWIP’s related private equity and infrastructure businesses, meaning Aberdeen’s asset base will swell by a total of £136bn.

The acquisition also includes SWIP’s investment solutions division, a separate investment group that provides advice in relation to approximately £15bn of Lloyds’ wealth clients’ discretionary assets.

Adrian Lowcock of Hargreaves Lansdown said the deal is a good result for investors in SWIP funds as Aberdeen has a proven track record of long term investment performance.

“SWIP has struggled to retain good fund managers over years and currently none of their funds appear on HL’s Wealth 150,” he said.

“There will almost certainly be fund manager changes and fund closures, however investors in SWIP funds should be patient and wait for more information before deciding whether to switch.”

Aberdeen which will become Europe’s largest listed fund manager with a total of £336bn in assets under management as a result of the acquisition.

The acquisition is expected to complete by Q1 2014. Fully separating SWIP from Lloyds is expected to take around 12 months, with Aberdeen incurring related one-off costs of up to £50m.

“This transaction is significant for the long-term prospects of Aberdeen in a number of ways. It strengthens our investment capabilities. […] We are confident that this transaction will deliver considerable additional value to our expanded client base and this will therefore benefit our shareholders,” said Aberdeen CEO Martin Gilbert.

Aberdeen separately announced a 39% increase in underlying pre-tax profit of £482.7m for the year to 30 September.

AUM rose 7% to £200.4bn, though redemptions from its fixed income and solutions businesses led to full-year net outflows of £2.5bn for the business as a whole.