Henderson Group will acquire Gartmore Group in a two-for-three share swap that will boost Henderson’s assets under management to £78.1 billion ($121.6 billion), the companies announced Wednesday.
The deal values Gartmore at £335.3 million.
Gartmore shareholders will own 22.5% of Henderson after the acquisition closes, expected within the next three months.
The deal offers “compelling strategic and financial benefits” for Henderson as it plans to grow its higher-margin business and expand its investment capabilities, Henderson CEO Andrew Formica said in a conference call Wednesday.
“As well as enhancing our position in the hedge fund and absolute-return space, it significantly enhances the group’s position in the U.K. retail space (and) delivers a combined $6 billion of assets under management in (absolute return),” Mr. Formica said.
As of Dec. 31 and net of notified redemptions, £2.8 billion, or 17%, of Gartmore’s assets under management was in alternatives, with £1.6 billion in hedge funds and the rest in a private equity joint venture with Hermes Fund Managers, a spokeswoman for Gartmore confirmed. Gartmore’s AUM net of redemptions as of Dec. 31 was £16.5 billion.
Investment personnel overseeing 84% of Gartmore’s assets have committed to staying with Henderson after the acquisition, according to Richard Acworth, Henderson spokesman. Mr. Acworth said each contract varied in length of commitment, but that Henderson would offer various incentives to keep Gartmore’s investment staff on board. Regarding staff overseeing the remaining 16% of Gartmore AUM, Mr. Acworth said: “There are discussions ongoing with a number of key (Gartmore investment) people.”
Gartmore announced in November it would consider a sale after seeing billions in client redemptions following the departures of key investment staff.