US fund manager Federated Investors is to buy a 60% stake in Hermes Investment Management for £246 million (€200 million) from the BT Pension Scheme, one of the UK’s largest retirement funds.
Pittsburgh-based Federated, which has assets under management of $398 billion (€323 billion), will fund the deal through a combination of cash and an existing revolving credit facility.
The BT Pension Scheme is to retain a 29.5% share in Hermes and will continue to invest in Hermes as a client while some Hermes managers will hold a 10.5% shareholding in Hermes.
London-based Hermes, launched in 1983 as the in-house asset manager of the BT Pension Scheme, currently has assets under management of £33 billion and advises on £336 billion of assets. Today the BT Pension Scheme accounts for around 30% of Hermes’ assets.
“This is a growth opportunity for both Federated and Hermes, with Hermes’ range of investment strategies serving as effective complements to Federated’s existing strategies in equity, fixed income and cash management,” said Christopher Donahue, Federated’s president and chief executive.
“In addition, Hermes’ capabilities and client relationships in the UK, the rest of Europe and the Asia-Pacific region significantly broaden Federated’s distribution capabilities.”
The deal, which is subject to regulatory approval, is expected to complete in the second half of 2018 when the combined entity is expected to have around $442 billion in assets under management.
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