Henderson Group (HGG), the Anglo-Australian fund manager spun off by the AMP years ago, is to buy US fund manager Janus Capital in an all-stock deal that will create a global investment group with more than $US320 billion in assets.
The combined group, which will have a market capitalisation of around $US6.5 billion based on Monday’s share price moves.
It will be in the global top 50 of fund managers, but will still be smaller in terms of assets than Macquarie Asset Management which had $US371 billion under management at June 30 this year.
It will apply to trade in New York as its primary listing, with Henderson retaining a listing in Australia. But Henderson will no longer be listed in London following the merger.
The deal is being billed as a “merger of equals”, with Andrew Formica, chief executive of Henderson, and Dick Weil, chief executive of Janus, sharing a co-chief executive role in the new company, Janus Henderson Global Investors.
But the Financial Times said “The tie-up of the new US home of veteran bond investor Bill Gross and the UK’s third-largest listed fund management company comes at time of increasing pressure on active fund managers like Janus and Henderson.”
These active (stock and trend pickers) like Henderson and Janus are being left behind by the rise and rise of passive tracker investor groups, such as the massive Vanguard (with over $US3 trillion in assets, or 10 times the size of the proposed group). Blackrock is the largest global investment manager with $US4.7 trillion under management.
Henderson shareholders will own 57% of the combined company, with Janus shareholders taking the rest.
Henderson chairman Richard Gillingwater will lead the combined board and the headquarters will remain in London, in a boost for London as a financial centre, but Henderson will delist from the London Stock Exchange, which will lessen the groups attraction to UK investors.
“Janus’s strength in the US markets will be combined with Henderson’s strength in the UK and European markets to create a truly global asset manager with a diverse geographic footprint which closely matches the global fund management industry,” the two companies said. They also confirmed that Janus’s largest shareholder, Daiichi Life of Japan will support the merger.
Shares in Henderson rose more than 19% at the market open on overnight Monday. They ended the day up 16.8%, giving it a market capitalisation of about £2.8 billion.
Henderson and Janus are targeting of $US110 million of cost benefits, much of which will come from savings on office and IT costs. Janus Henderson will be 37% invested in US equities, 23% in fixed income, and 17% in global equities.
Executives said talks on a proposed deal started before the Brexit vote on June 23.
Henderson was spun out of AMP in 2003-05 in a series of sales.
It bought smaller fund managers Gartmore in 2011 and New Star in 2009, while Janus has made a series of smaller acquisitions in recent months, taking a minority stake earlier this year in hedge fund, LongTail Alpha. Last year, Janus also bought a majority interest in Kapstream Capital, an Australian fixed income manager with $US6.6 billion in assets under management.
