Magellan was in a trading halt after confirming an all-scrip acquisition of Barrenjoey Capital Partners, valuing the business at $1.62bn and resetting the group’s strategic direction.
This is a very interesting move, with clear strategic rationale, taking Magellan’s balance sheet and combining it with Barrenjoey’s growth. Last year, BJ hit 500m annualised revenue, growing ~45% in the last half.
The deal means that MFG shareholders retain ~58% ownership, but Barrenjoey supplies the chairman, CEOs and strategic direction, which is effectively Barrenjoey taking the wheel.
The combined group will have a ~$2bn capital base (cash + investments) giving them real firepower in private markets, credit and corporate activity – areas they want to grow in.
Matthew Grounds & Guy Fowler (both ex UBS) are great operators, and both have collected a big pay-day (in MFG shares), although they will escrow their holding for 9 years – which is pretty staggering and goes a long way to highlight their longer-term optimism in the tie up.
Post deal, MFG shareholders will own ~58.2% and Barrenjoey partners will own ~41.8% given MFG already held a ~36% economic interest in Barrenjoey.
MFG are raising ~$130m via an institutional placement at $8.45 – very close to the last price and there will also be a small Retail Share Purchase Plan (SPP) for an additional ~$20 million.
- MM believes this is a very interesting deal and should be well supported.
MM is now bullish MFG ~$8.45
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