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News

  • Intu Struggling to fathom what made the Remuneration committee think this is a good time to boost the potential LTIP awards this morning
  • CLIG announced they would put results out today. Nothing yet.
  • Ninety One (Investec Asset Management) announces its intention to float.

Jupiter Fund Management – Acquisition

Share Price 397p

Mkt Cap £1,815m

Conflict Disclosure: No Holding

  • Statement Over the week end it emerged that Jupiter is in advanced talks to but Merian Global Investors, confirmed this morning.  Price is £370m up front with £20m deferred and Merian bring net debt of £29m equating to EV/AUM of 1.9%. TA Associates acquired Merian a little over 2 years ago, paying £600m for a majority stake. Back then the AUM was £30bn. Jupiter’s AUM back then was £50.2bn and Jupiter hasn’t yet disclosed its Dec 19 AUM but last September it stood at £45.1bn.   
  • Cost savings The underlying EPS accretion is said to be low to mid-teen accretion. Based of Jupiter reveues of £377m and Merian’s management fees of £140m that suggests c£60m cost savings from 2021 and increasing from 2022. The one off cost is expected to be £40-£45m.
  • Valuation Forecasts for Dec 2021 are for 27.7p EPS. If we accrete this by 12% for the cost savings that puts the shares on 12.8X. Premier Miton trades at 11.6X ahead of achieving their 27% accretion from the costs savings on their merger.
  • Strategic Henderson/Janus, Aberdeen/Standard Life, Liontrust/Neptune, Premier/Miton,  the list of squeezed fund managers combining is growing. While a new breed of specialists is emerging. Gresham House, Intermediate Capital, Impax, Arrow Global, and First Property seem to be the emerging highly specialist fund managers.
  • Conclusion This may improve fund diversification and achieve cost savings but is unlikely to improve flows in the short term. Net flows in the quarter to December, were -10% which is bottom of the pile when markets where strong.  There are cheaper, more transparent, and recovering fund managers to own. Underwhelming.

Share Plc – Bid

Share Price 29p

Mkt Cap £42m

Conflict Disclosure: No Holding

  • Bid Interactive Investor makes a (90%) paper offer valuing the company at 41p, or £60m, (assuming ii’s private company valuation of £675m).  
  • Valuation At 29p Share Plc trades at a PE of 41X and brings £5.3bn AUM with £22.8m revenues. The statement refers to shares values but to make financial sense significant cost savings, which aren’t mentioned, must exist.  Alongside some useful tools and benefits of scale.
  • Conclusion  This looks a useful deal for both parties. The benefits of scale are huge.  Note that Augmentum Fintech’s H1 results in December valued their 3.7% stake in ii at £14.8m implying a £400m value for Interactive Investor. Augmentum could be pregnant with a £10m write up.

jeremy@charltonillingworth.co.uk