Jupiter Fund Management To Acquire Merian Global Investors

On 17th February 2020, the Jupiter Fund Management Plc (LON:JUP) stated that it proposes to acquire Merian Global Investors Limited from private equity firm TA Associates, which is based in the United States of America, in an all-encompassing agreement.

This acquisition would be the first most crucial deal for the chief executive Andrew Formica, who was hired by FTSE 250 listed company in the year 2019 and he was broadly anticipated to take control of Merger and Acquisition activity of the company. Andrew Formica established his name at Henderson Global Investors for closing of agreements, which fructified in the merger with Janus Capital in the year 2016.

Merian Global Investors was led by Richard Buxton, who is United Kingdom’s stock picker of repute, until he gave up executive role in the year 2019. However, he is still its leading fund manager. The company was established via the buyout of Old Mutual Global Investors in the year 2018.

As per media report, Jupiter Fund Management Plc would pay £370 million in stock and £20 million in performance-linked payments. Addition to this, there is speculation also that Mr Buxton with the other portfolio managers at Merian Global Investors, will make a transition to Jupiter Fund Management Plc.

In December 2019, Andrew Formica stated that he would concentrate on increasing Jupiter’s range of active funds and hire gifted investment managers. He also said in his statement that Jupiter Fund Management Plc would grow with attracting disenfranchised leaders from other investment management groups. Lastly, he indicated that the company was overwhelmed with resumes and can initiate discussions with extremely high-ability fund managers who are incredibly keen in discussing with Jupiter Fund Management Plc because they would genuinely want to know what it’s like to work with the company.

Jupiter Fund Management Plc and Merian Global Investors endured significant outflows in the year 2019, with the active fund managers failing to attract funds and giving more business to the bigger United States -based passive fund houses. The new merged entity would have just over £65 billion of assets under management.

In the year 2019, Alexander Darwall left the company even after he was insisted to stay with Jupiter Fund Management Plc. He was the person who then established his own investment business, with greater than £1 billion from investor money with him.

From the day Andrew Formica joined the company, he closed most of the underperforming funds at Jupiter Fund Management Plc. It includes a small absolute return fund in February 2020 following its loss of 20 per cent in the initial six months of the year.

As per media report, Merian Global Investors stated that the deal was planned to enhance scale and productivities with merging of funds between the two group’s line-ups anticipated.

The private equity firm, TA Associates, supported Mr Buxton’s management takeover of Merian Global Investors. It undertook a similar responsibility when Jupiter Fund Management Plc was spun out from Commerzbank in the year 2007.

JUP – Overview of Jupiter Fund Management Plc

Jupiter Fund Management Plc (LON:JUP) is a well-known fund management group that pursues to enhance benefit for clients via the creation of outperformance throughout the long to medium term. The company was founded as a specialist investment boutique in the year 1985 in London. From this year to till today, the company has spread out beyond the United Kingdom as institutional investors and retail investors were attracted to the company’s approach to asset management. The company works relentlessly on maintaining boutique ethos. The company believes that due to this, some of the most proficient managers in the asset management industry prefer to align their careers with Jupiter Fund Management Plc.

JUP – Trading Updates

On 11th October 2019, the company announced trading updates for results in respect of the three months to 30th September 2019.

The company reported the net outflows in the third quarter of £1.3 billion. The reported asset under the management of the company was £45.1 billion as at 30th September 2019, a decline of £0.8 billion in the quarter.Â

The Net mutual fund outflows were £1.0 billion during three months to 30th September 2019. Out of this, £1.1 billion outflows were from European Growth strategy, primarily within Continental Europe and the United Kingdom.

Since the company’s declaration on 1st July 2019, Alexander Darwall has shown his intention to create an autonomous firm and planned to leave Jupiter in mid-November 2019. The transfer of management duties to Alexander’s replacements on Jupiter European Growth SICAV and Jupiter European Fund took place on 1st October 2019.

The segregated obligations saw £0.3 billion net outflows during three months to 30th September 2019. The two clients retracted assets totalling of £0.7 billion and two new fund management obligations were started in the period totalling £0.4 billion.

The closing asset under management of Segregated mandates decreased to £5.266 billion at the end of the third quarter of 2019 as compared to the £5.568 billion as on 30^th June 2019. The closing asset under management of Investment trusts decreased to £1.36 billion at the end of the third quarter of 2019 as compared to the £1.35 billion at the end of the second quarter of 2019.

JUP - Stock Price Performance

On 17^th February 2020, at around 08:14 AM (GMT), the stock of Jupiter Fund Management Plc was trading at a price of GBX 426.40 per share on the London Stock Exchange, an increase in the value of around 7.50 per cent or GBX 29.70 per share, as opposed to the closing price of the stock on the previous trading day, which has been reported to be at GBX 396.70 per share.

At the time of writing, the market capitalisation of Jupiter Fund Management Plc was £1.815 billion with regards to the current market price of the stock. The free float and outstanding shares of Jupiter Fund Management Plc were reported at 420.88 million and 457.70 million, respectively.

The share price of Jupiter Fund Management Plc recorded at GBX 437.80 as on February 17, 2020 was its 1-year peak price, whereas the share price recorded at GBX 309.04 as on 18^th February 2019 was its 1-year low share price. The current share price was lower by 2.60 per cent from the 1-year high price, whereas the current share price was higher by 37.98 per cent from the 1-year low price.

The beta of the stock has been reported at a value of 1.43, representing the fact that the volatility of share price of the company is higher as compared to the volatility in the movement of the comparative benchmark index.