Financial services company Perpetual Limited (ASX: PPT) has today announced its successful 75% acquisition of investment management business Barrow, Hanley, Mewhinney & Strauss. At a price of US$293 million (A$403 million), the purchase will instantly triple Perpetual’s asset under management (AUM) to more than $87 billion.
At the opening bell today, the Perpetual share price has dipped slightly by 0.2% to $30.38.
More details of the acquisition
An initial consideration of $403 million was paid to BrightSphere Investment Group Inc. (BSIG), the owner of Barrow Hanley. A potential additional payment may be paid to reflect final consents received, but will not exceed $439 million.
Barrow Hanley has around US$41 billion in assets under management across global equities and fixed income investments. It has a team of roughly 100 employees, head-quartered in Dallas. It also has international presence in London and Hong Kong. Perpetual says that Barrow Hanley will retain its brand and continue to operate independently with no change to its investment process or key personnel.
This acquisition is consistent with Perpetual’s stated strategy to build world-class investment capability and a global distribution footprint. Following the purchase, the company confirms it is on-track to achieve more than 20% underlying earnings per share (EPS) accretion on an annualised basis .
Perpetual chief executive and managing director Rob Adams says:
This is a transformational deal for Perpetual. We now have a broad range of world class investment capabilities; we have significantly diversified our AUM by client type, client location and by asset sector and; we now have multiple opportunities to drive strong future growth in AUM, with substantial capacity across those strategies.
The successful early build-out of our US distribution team is now greatly accelerated, with 31 distribution professionals joining us through the acquisition of Barrow Hanley. The Barrow Hanley investment teams are truly world class, and we are delighted to partner with them to forge a strong growth path into the future.
Perpetual’s other recent purchase
Today’s announcement came on the back of another recent acquisition by Perpetual. In July, the company purchased another US-based investment advisory firm Trillium. Trillium focuses exclusively on environmental, social and governance (ESG) investments. That deal was inked at $36 million and added $3.3 billion to Perpetual’s AUM.
Perpetual plans to introduce new business division Perpetual Asset Management International in the first-half of FY21. This will include the operations of Trillium and Barrow Hanley, and any future international asset management functions.
Quick take on Perpetual
Perpetual was founded in 1885 by Australia’s first prime minister Edmund Barton, and is a company steeped in history. Today, the diversified financial services company comprises four main businesses. These include Perpetual Investment, Perpetual Private, Corporate Trusts and Group Support Services.
How has the Perpetual share price performed in 2020?
The Perpetual share price has lost around 25% this year. The share price opened the year at $41.12, before COVID-19 disrupted its business. The Perpetual share price is currently trading at $30.38, giving the company a market cap of $1.72 billion.
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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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