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Jupiter acquires Merian Global Investors for £370m

Jupiter acquires Merian Global Investors for £370m

Another step in the direction of increased merger and acquisition activity in the UK fund management market has occurred with the announcement that Jupiter is to acquire rival fund house Merian Global Investors.

The combined group will have assets under management of more than £65bn, with Merian posting £22.9bn of assets under management at the end of December 2019. 

Merian Global Investors was known as Old Mutual Global investors until fund managers at the company, lead by head of UK equities Richard Buxton, acquired the firm in June 2018 for £550m. 

Mr Buxton was chief executive until standing down in June 2019, though he continues as a fund manager and head of UK equities. 

He was joined in the buyout by fellow fund managers Ian Heslop, Richard Watts, Dan Nickols, Amadeo Alernton, and Mike Servent. 

The company has suffered a wave of outflows over the past year, as a combination of negative sentiment towards UK assets hit demand for the funds run respectively by Mr Buxton, Mr Watts and Mr Nickols, while a wave of underperformance caused outflows from the mandates run by Mr Heslop, Mr Alernton, and Mr Servant. 

FTAdviser previously reported that the company had outflows running at an average of £670m a month for the first ten months of 2019. 

A statement released to the stock exchange this morning (February 17) from Jupiter said it is paying an immediate £370m for the company, all via shares in Jupiter.

The fund managers who are selling their shares can also potentially earn future payments totalling £20m if they grow the revenue generated by their funds. 

The £370m price represents a loss on the £550m paid for the business.The private equity firm which backed Mr Buxton and his colleagues in the acquisition of Merian, TA Associates, will be very familiar with Jupiter, as they previously backed the management of that business in their acquisition of Jupiter. 

The deal is the first significant acquisition by Jupiter chief executive Andrew Formica, since he took the helm in March 2019.

Mr Formica was previously chief executive of Henderson Global Investors, during which time he embarked on a wave of acquisitions. 

Merian shareholders will own a combined 17 per cent of the business after the takeover is completed. The five fund managers who were major shareholders in Merian will own about 1 per cent of the combined company.

Jupiter will take on and pay-off Merian’s debts as part of the deal, which is expected to be completed in the second half of 2020 subject to shareholder approval. 

Mr Formica said: “This is an exciting acquisition that enhances our position as a leading UK asset manager, provides increased scale and diversification into attractive product areas, and creates stronger future growth prospects for the business. It is also consistent with our strategic priorities, adding strong investment talent with a similar culture and investment philosophy. 

“The addition of Merian is compelling for all stakeholders. With this acquisition, our business will benefit from an increased capacity to attract, develop and retain high quality talent, backed by further investment in our platform and technology. In turn, we will be able to offer a wider choice of strongly.”