14th Jun 2016 12:01
LONDON (Alliance News) - OM Asset Management PLC, the New York-listed boutique asset manager in which Anglo-South African financial services company Old Mutual PLC has a 66% stake, on Tuesday said it will acquire a 60% equity interest in Landmark Partners, a private equity and real estate investment company headquartered in Simsbury, Connecticut.
In a statement, OMAM said it will pay about USD240 million in cash for Landmark, which also has offices in Massachusetts, New York, and London, with the potential for an additional payment based on the growth of the business through 2018.
OMAM intends to fund the purchase with available capacity on its existing revolving credit facility. It also raised the possibility of alternative sources of debt financing depending on market conditions, and expects the deal to boost 2017 economic net income per share by up to 12%.
"Landmark fits comprehensively into our stated acquisition strategy, providing a leading platform in an increasingly important asset class, leveraging the strength of our global distribution group, expanding our range of active strategies for investors, and further diversifying our earnings base by broadening our participation in alternative investment strategies," James Ritchie, chairman of OMAM, said in a statement.
The move comes weeks after Old Mutual said it had received interest from would-be buyers of its remaining stake in OMAM. In May, Old Mutual said there was "no certainty" that the third-party approaches would lead to a transaction. Bruce Hemphill, who set out plans to split up Old Mutual's four operating divisions after being appointed as chief executive of Old Mutual in November 2015, said on Tuesday that he welcomed OMAM's announcement.
"We welcome OMAM's delivery on its stated intent of acquiring value-enhancing and additive asset management capabilities in key growth classes," Hemphill said in a statement.
Old Mutual's other three divisions are made up of a 54% stake in Johannesburg-listed lender Nedbank, its emerging markets business based in South Africa, and a wealth management arm focused on the UK. OMAM on Tuesday said more work has been done in terms of the planned separation.
OMAM said it has negotiated an "acceleration and subsequent termination" of the deferred tax asset deed and seed capital management agreement with Old Mutual. That means OMAM's ongoing liabilities to Old Mutual under both agreements shall be satisfied earlier than expected.
"The amended arrangements for the deferred tax and seed assets are important steps in our relationship with OMAM. Old Mutual's strategy is to support the growth of its four strong underlying businesses at the same time as progressing with the managed separation," Hemphill said on Tuesday.
Shares in Old Mutual were down 1.9% at 172.90 pence on Tuesday.
By Samuel Agini; [email protected]; @samuelagini
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