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ASX 200 rises 0.3%, Perpetual reveals large US acquisition

ASX 200
Credit: Cimexus

The S&P/ASX 200 Index (ASX: XJO) rose 0.3% today to 6,044 points despite initially being in the red this morning.

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Perpetual Limited (ASX: PPT) US acquisition

Fund manager Perpetual announced that it’s going to acquire a 75% stake in US-based asset manager Barrow Hanley for $465 million.

Barrow Hanley manages approximately US$44.1 billion of funds across US, global, and emerging market equities as well as fixed income strategies.

Perpetual said it was an important acquisition to deliver sustained quality growth and it will diversify its investment capabilities.

The ASX 200 fund manager business expects to add more than 20% of underlying earnings per share (EPS) on an annualised basis from the date of completion. The acquisition is expected to complete by the end of the first half of FY21, subject to the usual approvals.

The acquisition will be funded by a combination of a capital raising, a new debt facility and existing cash.

Perpetual is going to raise $225 million in a fully underwritten institutional placement and then it hopes to raise another $40 million in a share purchase plan (SPP). The debt facility is for $284 million. The raising price is $30.30 per share, a 9.8% discount to the last closing price.

The acquisition is expected to more than triple Perpetual’s funds under management (FUM) from $28.4 billion to $92.3 billion.

The ASX 200 business said it’s expecting a statutory net profit of $82 million for FY20 and an underlying profit after tax of $93.5 million.

Emeco Holdings Limited (ASX: EHL) FY20 result

Mining heavy equipment rental business Emeco announced its FY20 result today.

Emeco’s revenue rose by 16.3% to $540.4 million. Iron ore revenue more than tripled and gold revenue more than doubled. Operating earnings before interest, tax, depreciation and amortisation (EBITDA) increased 15% to $246.1 million. Operating earnings before interest and tax (EBIT) rose by 10% to $138.2 million and operating net profit after tax (NPAT) went up 39% to $87.5 million.

The statutory NPAT rose 94.7% to $66.1 million.  Emeco said it generated “strong” free cash flow of $71.2 million.

Managing director of Emeco, Ian Testrow, spoke about the company’s aims for this year: “Our goals for FY21 are consistent to continue to diversify our commodity mix, expand the services the business provides, adding capital-light earnings, and continue to generate strong return on capital and cash flows to further deleverage. This will ensure we drive sustained shareholder returns.”

St Barbara Ltd (ASX: SBM) acquisition

The ASX 200 gold miner announced today it has agreed to acquire 100% of the shares in Moose River Resources Incorporated (MRRI). After this acquisition, St Barbara will own 100% of the Touquoy Mine and surrounding exploration tenements.

The proposal is that St Barbara will acquire the remaining shares for cash of approximately C$60 million. It will be funded from St Barbara’s existing cash reserves. The deal will require approval of 75% of MRRI shareholders and it’s subject to normal approvals.

St Barbara expects to complete the deal in early September 2020.

Mr Craig Jetson, managing director and CEO of St Barbara, said: “Touquoy is a low-cost operation, generating impressive margins and is located in a very favourable and prospective jurisdiction. It produced a record 106,663 ounces of gold in FY20, reinforcing the credentials of this operation and the value it is delivering to St Barbara.

“Assuming full control of the business will provide operational efficiencies , deliver financial benefits and allow us to truly realise the potential of the asset. In addition to developing our existing project pipeline we are exploring in the Moose River Corridor and elsewhere in Nova Scotia to identify further development opportunities.”

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Returns as of 6th October 2020

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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