The Magellan Financial Group Ltd (ASX: MFG) share price closed Monday’s session 5.32% higher. By the market’s close, shares in the fund management business were trading at $45.57 after closing Friday’s session at $43.27.
By comparison, the S&P/ASX 200 Index (ASX: XJO) edged just 0.12% higher for the day.
Let’s take a closer look at what’s been happening for Magellan.
Magellan backed Barrenjoey Capital gets ASX licence
In news that could have helped boost the Magellan share price today, the Sydney Morning Herald (SMH) reported that the ASX has granted Barrenjoey Capital (of which Magellan owns a 40% stake) a licence to be a market participant. This means the investment bank can clear and settle trades in its own name.
Barrenjoey already operates within the corporate finance space and intends to open up its markets arm by the end of FY21, now that it has received the licence.
In addition to the licence granting, SMH also reported that Barrenjoey is lifting top talent from some of its rivals. After picking up Challenger Ltd (ASX: CGF) managing director Brian Bernari as CEO, and UBS executive Guy Fowler as chair, the company is making several more acquisitions.
Three more UBS executives have left the Swiss bank for Barrenjoey. They are banking analyst Jonathan Mott, mining analyst Glyn Lawcock, and gambling and transport analyst Matt Ryan.
As well, BHP Group Ltd (ASX: BHP) chair, Ken Mackenzie, is rumoured to soon be joining Barrenjoey as a senior strategy partner.
What is Barrenjoey Capital?
Launched in 2018, Barrenjoey Capital is the latest investment bank to enter the Australian market. A joint venture between Magellan and Barclays, Barrenjoey provides corporate and strategic advice, equity and debt capital underwritings, cash equities, research, prime brokerage, and fixed income trading.
While Magellan and Barclays are financial backers and own equity in the company, the majority of the company will be owned by its employees.
Magellan’s net profit after tax for the six months ending 31 December 2020 was down 2% to $213.1 million. Part of the reason for this was the $6.1 million net loss Magellan incurred from its Barrenjoey investment.
Magellan share price snapshot
During the COVID-19 market crash of March last year, the Magellan share price reached a 52-week low of $30.10. At today’s price, it has gained more than 50% since that time. However, Magellan shares are down nearly 31% from their 12-month high of $66.00 achieved in August last year.
Magellan Financial has a market capitalisation of around $7.95 billion.
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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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