Jupiter plans to acquire Merian Global Investors
Listed Jupiter Fund Management has announced the proposed acquisition of Merian Global Investors, an asset manager with more than £22 billion assets under management.
The firm set out the rationale for the planned acquisition, stating in would enhance its position as one of the UK’s leading active asset managers with more than £65 billion of AUM post merger. It added that the “complementary and additive acquisition aligned with Jupiter’s high conviction active approach and investment culture”.
Furthermore, Jupiter said that it diversifies its existing offering with the current top 5 funds falling from 46 percent of AUM to 33 per cent. Of the AUM of the combined entity, the number of funds with greater than £1 billion of AUM increases from 10 to 16.
The migration of Merian’s investment team and assets onto Jupiter’s operational platform through the execution of a clear and well-designed integration plan has already been planned. Jupiter also sees substantial cost savings expected to be earnings accretive from 2022 onwards
Jupiter is to acquire the entire issued share capital of Merian for an upfront equity consideration of £370 million to be paid through the issue of 95,360,825 new Jupiter shares to Merian shareholders, with an additional deferred earn-out of up to £20 million payable to Key Merian Management Shareholders, subject to growing and retaining revenues in their investment strategies.
Investment platform AJ Bell commented on the proposed deal this morning. Ryan Hughes, head of active portfolios at the firm, said in a statement: “News that Jupiter is in talks to buy Merian will come as a surprise to many given that it was less than two years ago that Richard Buxton led a management buyout of his fund management business from Old Mutual, while Jupiter themselves have been touted as a possible bid target. However, the past 18 months have been tough for both businesses with outflows from flagship products that has provided a major hit to revenue with Jupiter losing Alexander Darwall from their European desk with assets following and Merian seeing their Global Equity Absolute Return fund shrink significantly with following weak performance.
“Jupiter’s CEO Andrew Formica is no stranger to M&A activity from his time at Henderson and this move may take some of the heat off the business which has been suffering significant outflows in recent quarters. This potential deal would bring significant economies of scale and the potential for the enlarged business to streamline its product range with overlap and sub-scale funds across both fund ranges, particularly in UK, European and Asian equities.
“Should this deal go through, it would continue the recent trend of active managers merging to try drive cost savings through their businesses to take the fight back to passive managers who are making inroads in the market and attacking asset managers’ revenues.”
This is one deal the market is sure to follow and shows increasing consolidation in the asset management space following Liontrust’s acquisition of Neptune last year.
