Magellan Financial Group (MFG)
Reaction to MFG acquiring Barrenjoey was initially very upbeat, but the excitement looks to have been short-lived. What are your thoughts on the retail SPP?
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Answer
Hi Frank,
The acquisition by MFG offers clear strategic rationale – pairing Magellan’s balance sheet with Barrenjoey’s growth platform. Barrenjoey generated around $500m annualised revenue last year, growing roughly 45% in the second half, highlighting the momentum in the business. Post deal, MFG shareholders will own ~58% of the combined entity while Barrenjoey partners hold ~42%, though operationally the leadership comes from Barrenjoey.
- The merged group will have around $2bn of capital (cash + investments), giving meaningful firepower in private markets, credit and corporate activity, areas they are looking to expand.
Barrenjoey founders Matthew Grounds and Guy Fowler (both ex-UBS) are highly regarded operators. A large portion of their consideration will be paid in MFG shares and escrowed for nine years, an unusually long lock-up that signal’s strong confidence in the long-term opportunity. At MM we like to see genuine “skin in the game,” and this structure demonstrates real alignment with shareholders.
To fund the deal, as you mention MFG has raised ~$130m via an institutional placement at $8.45, and the SPP is now open, raising an additional ~$20m. With the stock trading above $10 and with our positive view of the combined business, if we owned the stock, we would participate.
