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Perpetual announces $465 million Barrow Hanley acquisition

M&A Letters merger acquisition divestment spin-off ASX shares to buy

The Perpetual Limited (ASX: PPT) share price won’t be going anywhere today after the fund manager requested a trading halt.

Why is the Perpetual share price in a trading halt?

Perpetual requested a trading halt this morning while it undertakes an equity raising to fund a major acquisition.

According to the release, Perpetual has entered into an agreement with BrightSphere Investment Group to acquire its 75% interest in Barrow Hanley for US$319 million (A$465 million).

Barrow Hanley is a diversified investment manager based in Dallas, Texas with funds under management (FUM) of approximately US$44.1 billion (A$63.9 billion) across 21 key strategies.

Its team invests with a value orientation across US equities, global equities, global emerging markets equities, and fixed income strategies.

Management notes that the acquisition is consistent with its strategy to build world-class investment and distribution capability and brings together two complementary investment management brands.

It is expected to more than triple Perpetual’s FUM from A$28.4 billion to A$92.3 billion and add 21 key new strategies across asset classes, strategies, and geographies.

On a pro forma basis, post the acquisitions of Barrow Hanley and Trillium (which completed on 30 June), Perpetual’s FUM will be comprised of 14% Australian equities, 48% US equities, 11% global equities, and 27% cash & fixed income.

Perpetual Chief Executive Officer and Managing Director, Rob Adams, commented: “This is a compelling acquisition. It provides Perpetual with world-class investment teams, diversifies our client base by sector and geography, and presents us with significant growth opportunities in the Australian market and a formidable platform to scale our business internationally.”

How is Perpetual funding the deal?

To fund the acquisition, Perpetual is launching a fully underwritten institutional placement of A$225 million at a fixed price of A$30.30 per share. This represents a 9.8% discount to its last close price.

It is also aiming to raise a further $40 million via an underwritten share purchase plan and has agreed a new debt facility of A$284 million (US$195 million) to cover the balance.

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Motley Fool contributor James Mickleboro 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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