Magellan (ASX:MFG) share price slides lower after investing in Barrenjoey

The Magellan Financial Group Ltd (ASX: MFG) share price is trading lower today after announcing a major investment in Barrenjoey…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Magellan Financial Group Ltd (ASX: MFG) share price is dropping lower today following the release of an announcement.

At the time of writing, the fund manager's shares are down slightly to $56.79.

What did Magellan announce?

This morning Magellan announced that it has become a foundation investor in Barrenjoey Capital Partners.

Barrenjoey is a newly established Australian-based full-service financial services company. It will provide corporate and strategic advisory, equity and debt capital market underwritings, cash equities, research, prime brokerage, and traditional fixed income services to Australian and international clients.

The financial services company will be led by a team of experienced executives. This includes Guy Fowler as Executive Chairman and the former Challenger Ltd (ASX: CGF) leader, Brian Benari, as Chief Executive. They will be supported by John Cincotta, Matt Hanning, and Chris Williams as founding partners.

The Chairman of BHP Group Ltd (ASX: BHP), Ken MacKenzie, is due to join in early 2021 as Barrenjoey's Senior Strategy Partner. Mr MacKenzie will be available to provide strategic advice and senior counsel to CEOs, chairpersons, boards, executive teams and business owners in developing and executing their long-term strategies.

Former Telstra Corporation Ltd (ASX: TLS) executive, Cynthia Whelan, will join as a Senior Adviser.

Partnership model returns.

Magellan's CEO, Brett Cairns, was very pleased to be a founding partner in Barrenjoey and sees a lot of potential in its offering.

He said "Magellan is delighted to be a founding partner of Barrenjoey. We believe the partnership model that leaves control, equity ownership and core decision making with the executives is proven and powerful."

"This partnership model was adopted historically by many investment banks but unfortunately seems to have disappeared over the last 20 years. By offering true ownership and autonomy to staff, we believe that Barrenjoey will be able to attract the best and brightest talent in the country providing clients with the best possible service and outcomes," he added.

What has Magellan invested?

Magellan has made an investment of both cash and scrip for a stake in Barrenjoey.

Its investment comprises the issue of approximately 1.2 million Magellan shares and $90 million of cash, to take a 40% economic ownership interest in Barrenjoey. Though, it will only have a 4.99% voting interest.

The fund manager is also providing Barrenjoey with a $50 million working capital facility to support the growth of the business.

Mr Cairns said "This investment represents a rare opportunity to generate attractive financial returns together with meaningful optionality and diversification prospects for Magellan and its stakeholders over the long term. I look forward to joining the Board of Barrenjoey."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited and Telstra Limited. 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.

More on Share Market News

Broker written in white with a man drawing a yellow underline.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

a hand reaches out with australian banknotes of various denominations fanned out.
Opinions

2 incredible ASX shares I'd buy with $2,000 right now

These investments have global growth potential…

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Opinions

I'd buy this ASX dividend stock in any market

I’m planning to buy plenty more of this ASX stock in the coming months…

Read more »

Person with a handful of Australian dollar notes, symbolising dividends.
Dividend Investing

3 Aussie passive income stocks delivering decades upon decades of dividends

Income-focused investors could benefit from these stocks.

Read more »

rising asx share price represented by rollercoaster ride climbing higher
Broker Notes

2 ASX All Ords shares tipped to rip 20% to 85% in 2026

Here are 2 ASX All Ords shares that the experts predict will grow strongly in the new year.

Read more »

Army man and woman on digital devices.
Broker Notes

Bell Potter names the best ASX defence stocks to buy

Wanting exposure to this booming industry? Bell Potter has two picks for you.

Read more »

A graphic of a pink rocket taking off above an increasing chart.
Opinions

These 2 great ASX shares are bargain buys!

These stocks look really cheap to me and could deliver big returns.

Read more »

A little Asian girl is so excited by the bubbles coming out of her bubble machine.
Broker Notes

Wondering which ASX shares to buy for 2026? Experts weigh in

We reveal 4 ASX shares with buy recommendations from the experts.

Read more »