Andrew Formica, the chief executive of Henderson Global Investors, has admitted the merger deal with Janus Capital was largely prompted by rising costs and regulatory pressures.
Yesterday (3 October), Henderson announced it had struck a deal to merge with Janus, which will see the Henderson shareholders owning 57 per cent of the combined business, and Janus shareholders owning the remaining 43 per cent.
Mr Formica said the fund management industry is affected by “structural trends”, such as fee transparency, increasing costs, and the growth of passive funds.
He said the key to addressing all of these challenges was to create economies of scale and diversification, adding the combination of the two companies is better equipped to face these hurdles.
“I’m firmly convinced the way to address client needs and the structural drivers affecting the industry will create a new breed of active asset manager, one with a global presence,” Mr Formica said, adding his clients have “ambitions to be more global”.
“We have conviction that this business will be a stronger, better, and faster growing business than we could achieve on our own,” he said, adding however the temporary disruption and client acceptance means it will take several years for this to come through.
“We are still in the early stage in terms of establishing what the full costs are of integrating these two businesses; there will obviously be significant integration costs and redundancy costs, but we will update shareholders as we go through the process over the next few months.”
He also sought to reassure that the merger of the two companies will create minimal disruption, and any impact will be short-term.
When the deal is complete, the merge will create a company, Janus Henderson Global Investors, with a market cap of a $6bn (£4.7bn) and $320bn (£250bn) of assets under management.
This will make the business one of the top 10 fund management firms in the UK market.
