Barrow Hanley is a US-based diversified investment manager having funds under management of nearly $44.1bn

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Perpetual to acquire stake in US investment manager Barrow Hanley. (Credit: Tumisu from Pixabay)

Perpetual, an Australian financial services company, has agreed to acquire the 75.1% stake held by BrightSphere Investment Group (BSIG) in Barrow, Hanley, Mewhinney & Strauss (Barrow Hanley) for AUD465m ($319m).

Barrow Hanley is a US-based diversified investment manager having funds under management of nearly $44.1bn. Headquartered in Texas, the company provides US, non-US, global and emerging market equity, and fixed income investment management services.

The remaining stake of about 25% in the US-based investment manager will be retained by its investment and management team members. The company will continue to operate under the same brand independently.

Perpetual said that the transaction is anticipated to increase its funds under management three folds to AUD92.3bn ($65.87bn) while adding 21 key new strategies across asset classes, strategies, and regions.

Perpetual CEO comments on the acquisition of a stake in Barrow Hanley

Perpetual CEO and managing director Rob Adams said: “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.

“Barrow Hanley has a 40-year track record of value investing with a highly regarded brand, an experienced and invested management team and a broad, blue-chip, institutional client base; many of whom have been with the company for more than 20 years.”

Perpetual is said to be among the largest wealth managers in Australia, which caters to high net worth individuals, families, and businesses. The company also offers corporate trustee services.

The acquisition of a stake in Barrow Hanley follows its acquisition of Australia-based environmental, social, and governance (ESG) investment firm Trillium in January 2020.

Perpetual said that following the acquisitions of the two firms, its funds under management will be made up of 48% US equities, 14% Australian equities, 11% global equities, and 27% cash and fixed income.

Barrow Hanley CEO and executive director Cory Martin said: “We are confident that we have found the perfect partner and complementary culture to continue our shared mission of delivering competitive investment results with a resolute commitment to clients.

“This strategic partnership offers the opportunity to further develop our current growth initiatives and to reinvest in our business while maintaining our focus on successfully managing client portfolios.”

Perpetual has also agreed to redeem the seed capital investments of BrightSphere Investment Group in Barrow Hanley strategies at the closing of the deal, which had a market value of around $44m as of 30 June 2020.

BrightSphere Investment Group, which is a US financial investment management company, expects using a part of its deferred tax assets to off-set cash taxes related to the deal, resulting in total expected after-tax proceeds of around $320m, which includes the seed capital.

Subject to receipt of customary approvals and other approvals, the deal is expected to be closed by the end of the first half of FY2021, said Perpetual.

In a separate deal, BrightSphere Investment Group has agreed to divest its equity interests in Copper Rock Capital Partners to Spouting Rock Asset Management and Copper Rock management for about $15m.