BrightSphere Investment Group is reducing its affiliate pool to five managers from seven with the sale of its ownership stakes in value-oriented equity manager Barrow, Hanley, Mewhinney & Strauss and growth equity manager Copper Rock Capital Partners.
The transactions will result in after-tax proceeds of about $335 million.
In a deal expected to close in the fourth quarter, BrightSphere agreed to sell its 75.1% ownership in Barrow Hanley to Perpetual Ltd., an Australian financial services company, for $319 million, BrightSphere news release said. Perpetual also will redeem BrightSphere's seed capital investments in Barrow Hanley strategies, when the deal closes. Brightsphere anticipates after-tax proceeds from the sale of about $320 million, including seed capital.
Barrow Hanley manages $44 billion.
BrightSphere also announced that it earlier sold its equity interest in Copper Rock to Copper Rock executives and Spouting Rock Asset Management. Copper Rock manages $2.2 billion.
After-tax proceeds of the Copper Rock sale were about $15 million, which included seed capital but not upside sharing arrangements, BrightSphere President and CEO Suren Rana told analysts Monday on a call.
Other details about Copper Rock, such as the size of BrightSphere's ownership stake and the purchase price, were not disclosed because they are "immaterial," Mr. Rana said. Copper Rock is "very small" compared to the firm's other affiliates.
Mr. Rana told analysts during the call that the divestiture of the ownership stakes in Barrow Hanley and Copper Rock are part of the firm's intent to focus more on the quantitatively managed strategies run by Acadian Asset Management and the secondary private market business of Landmark Partners.
BrightSphere's other affiliates are Campbell Global, a sustainable timber and natural resources manager; Investment Counselors of Maryland, a U.S. value-equity manager; and Thompson, Siegel & Walmsley, a global value equity and fixed-income manager.
As of March 31, the seven BrightSphere affiliates managed an aggregate $162 billion.
Mr. Rana said on the analyst call that the reduction in the affiliate pool will not only result in "a stronger pro forma business but it will also be a lot simpler."
In response to an analyst's query about BrightSphere possibly using the proceeds of the stake sales for acquisitions, Mr. Rana stressed: "We're not looking at any acquisitions. We don't see other opportunities more compelling than buying back our own stock."
Other uses for the proceeds of the stake sales will be to pay down debt and to seed new strategies of BrightSphere's remaining affiliates for "organic growth," Mr. Rana said.
