At the time of writing, the property company’s shares are fetching for $20.19, down 6.61%.
What did Charter Hall update the ASX with?
In its announcement, Charter Hall advised it has acquired a 50% interest in Paradice Investment Management (PIM).
Founded in 2012, PIM is a fund manager with around $18.2 billion in funds under management (FUM). Allocated across Australian and global-listed equities, PIM has delivered a 20-year track record of growth.
The organisation has offices in Sydney, Australia, as well as Denver and San Francisco in the United States.
Under the terms of the deal, Charter Hall will pay $207 million for a 50% investment in PIM. This will be funded from 70% of Charter Hall securities and a 30% cash component. The latter will be used by PIM shareholders to fund tax obligations created from the sale.
In addition, Charter Hall also has the option to acquire the remaining 50% of PIM at the commencement of FY25.
The partnership is expected to be accretive in the first full year of earnings. Despite the acquisition, Charter Hall re-affirmed its FY22 operating earnings guidance no less than 105 cents per security.
Notably, the investment provides a strategic expansion of Charter Hall’s $61.3 billion funds management platform.
Securities issued as consideration represent approximately 1.55% of Charter Hall’s securities on issue pre-transaction. The securities will be held in escrow and released to PIM shareholders in two equal tranches at 30 June 2023 and 2024, respectively.
It is expected that the transaction will settle by 31 December 2021.
Charter Hall managing director and group CEO, David Harrison commented:
This partnership represents a rare opportunity to invest in a large scale, high-quality listed equities fund manager with $18.2 billion of FUM and a 20-year track record, building upon and significantly expanding our existing listed real estate equities business. It diversifies Charter Hall’s FUM and earnings streams, introduces new client relationships to both businesses across wholesale and retail equity source segments.
Charter Hall share price snapshot
The Charter Hall share price has accelerated to almost 45% in the past 12 months and is up 40% year-to-date. The company’s shares reached a high of $22.18 last week, before treading lower.
Based on valuation grounds, Charter Hall commands a market capitalisation of around $9.60 billion, with 465.78 million shares on issue.