Standard Life and Aberdeen Asset Management have agreed a merger that would catapult the combined group into the top 20 largest asset managers in the world.

The two groups announced the planned transaction over the weekend. The deal is due to complete in the third quarter of 2017.

According to IPE’s Top 400 analysis of the world’s largest asset managers, the combined entity – which is yet to confirm its new brand – would have assets under management of roughly €738bn, making it the fourth largest management group in Europe and 17th largest in the world. This is based on data from the end of 2015.

However, both firms have recorded outflows since then, with Aberdeen taking a sizeable hit to its emerging market equities business in particular. In its 2016 annual report, Aberdeen reported outflows of nearly £33bn (€38bn) in the 12 months to the end of September. In the fourth quarter of the year it saw another £10.5bn withdrawn from across its fund range.

Standard Life, meanwhile, reported a £4.3bn net outflow from its flagship Global Absolute Return Strategies fund during 2016, while overall net inflows for its fund management business fell from £3.3bn in 2015 to £1.1bn.

After the transaction, Standard Life shareholders will own roughly 66.7% of the combined company, according to the merger announcement. Standard Life CEO Keith Skeoch and Aberdeen CEO Martin Gilbert will be co-CEOs of the new group, while Sir Gerry Grimstone, currently chairman of Standard Life’s board, will be chairman of the combined entity.

Skeoch said the merger would “create a formidable player in the active asset management industry globally”. Gilbert added that the two groups had “highly complimentary capabilities”.

Simon Troughton, chairman of Aberdeen and proposed deputy chair of the new firm, said: “The strategic fit is compelling and creates a business with minimal client overlap and which is diversified by revenues, asset class, and distribution channel. The combination will result in a material enhancement to earnings and this, coupled with a strong balance sheet, will facilitate significant investment in the business to support growth, innovation and a progressive dividend policy.”

Two of Aberdeen’s largest shareholders, Lloyds Banking Group and Mitsubishi UFJ Trust and Banking Corporation, have voiced support for the merger.

Aberdeen has a track record of growing through acquisitions, such as the 2013 purchase of Scottish Widows Investment Partnership from Lloyds. Standard Life is also no stranger to acquisition, having bought Ignis Asset Management in 2014.