The company being created from the merger of Treasury Group Ltd. and Northern Lights Capital Group LLC will double its AUM within five years, its CEO predicts.
Andrew McGill, the CEO of Treasury Group who will be CEO of the merged entity, said the growth will come from the combined company's expanded distribution capabilities and expected additions to the roster of money management firms.
The money managers in which the two own stakes had a combined $46.2 billion in assets under management as of June 30, with $23.6 billion from Treasury Group and $22.6 billion from Northern Lights. (All assets in this story are in U.S. dollars. Included in the data for Northern Lights is WHV Investment Management LLC. Northern Lights does not own a stake in WHV; rather, it has an economic interest.)
The deal, announced last month, is expected to close in October. The combined company will retain the Treasury Group name.
No money changed hands in the transaction. Treasury shareholders received shares equal to 61% of the new company, while Northern Lights shareholders received shares equal to a 39% interest.
But the Northern Lights shares have no liquidity at full value until Treasury Group officials obtain a listing for stock on a global stock exchange, a process that is expected to take several years. Currently, Treasury Group trades on the Australian Securities Exchange.
Several sources say the restriction was designed to prevent the 27 Northern Lights shareholders from selling large blocks of their new shares immediately, which could drive down the price of Treasury Group stock.
Treasury Group, Sydney, owns stakes in eight boutique money managers. Northern Lights, Seattle, owns stakes in 12 managers, plus its economic interest in WHV. Six of the eight Treasury Group managers are in Australia and serve a client base dominated by Australian institutional investors.
Analysts who cover publicly traded Treasury Group say the merger will give the money management firms in its portfolio the ability to more easily distribute their investment strategies in the United States. Northern Lights has an eight-person distribution team in the U.S., and 10 of its managers are in the U.S.