Perpetual has acquired a 75% interest in a US-based asset manager.
Perpetual has entered an agreement with BrightSphere Investment Group to acquire its stake in $64 billion Barrow, Hanley, Mewhinney & Strauss (Barrow Hanley); a global manager based in the US that invests across US, global and emerging market equities and fixed income.
The remaining 25% interest is owned by Barrow Hanley's investment and management personnel.
Perpetual will pay about $465 million for the acquisition, funded via a $265 million equity raise (39.5% of the total cost), a new $284 million debt facility (nearly 50%) and cash (10.6%).
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The acquisition is expected to more than triple Perpetual's funds under management from $28.4 billion to $92.3 billion.
"This is a compelling acquisition. It provides Perpetual with world-class investment teams, diversifies our client base by sector and geography, and presents us with significant growth opportunities in the Australian market and a formidable platform to scale our business internationally," Perpetual chief executive and managing director Rob Adams said.
Barrow Hanley currently has 95 staff, including 54 investment professionals, across its Dallas, Hong Kong and London offices. It will retain its brand and continue to operate as usual with no changes to its investment process or people expected.
The acquisition comes as Perpetual's investment management business reported $400 million in net outflows in the June quarter, which also saw the company curb variable remuneration across the board.
Barrow Hanley is well known to Perpetual, as the latter already uses Barrow Hanley's expertise in its multi-manager portfolios offered to Perpetual Private clients.
Adams last year said the company wanted to add global mangers (including outside of its traditional value investing style) while keeping the domestic team to its value investing heritage. Also last year, Perpetual was reported to have considered Pzena Investment Management (then at US$38 billion in total FUM), which Adams denied to be actively chasing in an interview with Financial Standard.
At the time, Adams said the business was likely to look at firms investing in: global emerging markets, global listed infrastructure and unlisted assets such as private market debt.
Barrow Hanley's 21 strategies cover US, Europe and Far East global and emerging market equities and US fixed income. The total FUM is split as 60% US equities, 15% global equities and 20% fixed income. More than 80% its accounts are US-domiciled.
Perpetual said Barrow Hanley has room for adding further retail offering (via mutual funds and ETFs) in United States and other countries. It also accelerates Perpetual's footprint in the US and provides Hong Kong and UK presence.
Post-acquisition, Perpetual's combined $92.3 billion will now be 42% US equities, 11% global equities, 14% Australian equities, 27% cash and fixed income and 6% Trillium (ESG).
Barrow Hanley and Trillium will be 29% of the total operating revenue post acquisition.
Perpetual is expecting to statutory net profit after tax of $82 million for FY20.