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Macquarie Group (ASX:MQG) taps US-based asset manager for $2.3 billion 

  • December 03, 2020 02:31 PM AEDT
  • Kunal Sawhney
    CEO Kunal Sawhney
    2235 Posts

    Kunal Sawhney is founder & CEO at Kalkine and is a richly experienced and accomplished financial professional with a wealth of knowledge in the Australian Equities Market. Kunal obtained a Master of Business Administration degree from University of T...

Macquarie Group (ASX:MQG) taps US-based asset manager for $2.3 billion 

Summary

  • Macquarie Group is strengthening its asset management business with a $2.3 billion US-based acquisition. 
  • Macquarie Asset Management, which contributes to the majority of earnings of Macquarie Group, would become a top 25 asset management firm.  
Gold MTF non-AMP

ASX 200 heavyweight Macquarie Group Limited (ASX:MQG) is adding more firepower to its asset management business. Macquarie Asset Management is acquiring Waddell & Reed Financial, Inc., an NYSE-listed asset and wealth management company. 

Since the crisis lowered investor expectations, large companies are looking to find to bargain at this moment. Macquarie Asset Management remains a cash cow for the group and is set to become stronger after the deal. 

The deal also represents Macquarie’s commitment to increase its annuity-style revenues. Waddell & Reed shares have surged in the after-hours trading as the deal was disclosed by Macquarie Group. 

© Kalkine Group 2020

Macquarie Group is paying around $2.3 billion or US$1.7 billion. The purchase price represents US$25 per share consideration in cash. 

It has also agreed to sell Waddell & Reed’s wealth management platform to LPL Holdings Inc., which would also become a top tier strategic asset management partner of Macquarie. 

The Making of Asset Management Giant

Macquarie Asset Management would have an asset under management of over US$465 billion after the completion of the transaction. The combined business would fall within the top 25 asset managers in the US mutual fund industry. 

Waddell & Reed has a rich history of providing investment and wealth management since 1937. Its investment products are labelled under the IVY INVESTMENTSTM brand. 

At the end of September, Waddell & Reed had AUM of US$68 billion and asset under administration of US$63 billion in the wealth management business. 

© Kalkine Group 2020

Subject to approvals, the transaction is expected to close by mid-2021. The transaction is also backed by the Board of LPL Holdings, Macquarie Group and Waddell & Reed. 

The partnership with LPL Holdings would enable Macquarie to service the existing wealth management clients and provide long-term opportunities. Macquarie would be selling wealth management platform to LPL Holdings for US$300 million. 

On 3 December 2020 (AEDT 02:17 PM), MQG traded at $ 138.830, up by 0.354% from the previous close.

 

 


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