Principal Global Investors [see profile] is buying a majority stake in London-based Origin Asset Management. Principal will pay approximately $66 million to own a 74 percent stake in the global equity specialist.
The deal is expected to close in October.
Company Press Release
Principal Global Investors to Acquire Majority Stake in Origin Asset Management
Acquisition expands global equity investment capabilities
DES MOINES, Iowa, Jul 07, 2011 -- Principal Global Investors, LLC, a leading global asset manager and a member of the Principal Financial Group(R) (NYSE:PFG), today announced a definitive agreement to acquire a 74% stake in Origin Asset Management, LLP, (Origin), for approximately US $66 million based on current exchange rates (GBP £40.7 million). Origin is an established global equity specialist based in London.
"We are delighted to be entering into this partnership," said Jim McCaughan, chief executive officer of Principal Global Investors. "Origin's proven capabilities in managing global equities will be very attractive to our clients and advisors around the world."
Origin was founded in 2005 by a respected team of investment managers in partnership with IPGL, a private holding company. The firm now has approximately US $3 billion1 in assets under management in Global and International equities. Additionally, Origin recently launched two new products: Global Smaller Company and Emerging Market Funds. Origin partners will retain a 26 percent stake in the business and will be reinvesting a substantial share of their consideration into funds managed by the firm. All passive investors in Origin, including IPGL, will sell their entire holdings to The Principal.
"We are excited to be teaming up with Principal Global Investors," said Nigel Dutson, managing partner of Origin. "This strategic partnership will allow us to continue the development of our business around the world while maintaining our operating independence, distinctive investment process and organizational culture." Through this transaction, Principal Global Investors will enhance its global equity capabilities and further strengthen its well-established multi-boutique model. Origin will benefit from access to The Principal's global presence, product development expertise and best practice support infrastructure.
"Origin's strong reputation and distinct investment expertise complements our existing product suite," said McCaughan. "This partnership also increases our investment capabilities in emerging markets and in global small and mid-cap companies, where additional high-quality investment capacity is much sought after, but in relatively short supply."
The transaction is expected to close in October 2011, pending regulatory approval. Excluding transaction and integration costs, Principal Financial Group estimates the acquisition will be EPS neutral in 2011 and slightly accretive in 2012. Fenchurch Advisory Partners advised The Principal on the transaction.
This is the third acquisition announced this year as part of Principal Financial Group's 2011 capital deployment strategy. In addition to these acquisitions, The Principal's Board of Directors in May renewed authorization to repurchase up to $250 million of the company's outstanding common stock.
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Forward looking and cautionary statements
This press release contains forward-looking statements, including, without limitation, statements as to operating earnings, net income available to common stockholders, net cash flows, realized and unrealized gains and losses, capital and liquidity positions, sales and earnings trends, and management's beliefs, expectations, goals and opinions. The company does not undertake to update or revise these statements, which are based on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Future events and their effects on the company may not be those anticipated, and actual results may differ materially from the results anticipated in these forward-looking statements. The risks, uncertainties and factors that could cause or contribute to such material differences are discussed in the company's annual report on Form 10-K for the year ended Dec. 31, 2010, and in the company's quarterly report on Form 10-Q for the quarter-ended March 31, 2011, filed by the company with the Securities and Exchange Commission, as updated or supplemented from time to time in subsequent filings. These risks and uncertainties include, without limitation: adverse capital and credit market conditions that may significantly affect the company's ability to meet liquidity needs, access to capital and cost of capital; continued difficult conditions in the global capital markets and the economy generally that may materially adversely affect the company's business and results of operations; the risk from acquiring new businesses, which could result in the impairment of goodwill and/or intangible assets recognized at the time of acquisition; impairment of other financial institutions that could adversely affect the company; investment risks which may diminish the value of the company's invested assets and the investment returns credited to customers, which could reduce sales, revenues, assets under management and net income; requirements to post collateral or make payments related to declines in market value of specified assets may adversely affect company liquidity and expose the company to counterparty credit risk; changes in laws, regulations or accounting standards that may reduce company profitability; fluctuations in foreign currency exchange rates that could reduce company profitability; Principal Financial Group, Inc.'s primary reliance, as a holding company, on dividends from its subsidiaries to meet debt payment obligations and regulatory restrictions on the ability of subsidiaries to pay such dividends; competitive factors; volatility of financial markets; decrease in ratings; interest rate changes; inability to attract and retain sales representatives; international business risks; a pandemic, terrorist attack or other catastrophic event; and default of the company's re-insurers.
About Principal Global Investors
Principal Global Investors is a diversified asset management organization and a member of the Principal Financial Group, with expertise in equities, fixed income and real estate investments, as well as specialized overlay and advisory services. Principal Global Investors manages $235.3 billion in assets2 primarily for retirement plans and other institutional clients. For more information, visit www.principalglobal.com
Origin Asset Management LLP is an independent investment management company that has been in operation since May 2005. Their investment team manages £2.0 billion3 (US $3.2 billion) in equity portfolios on behalf of major institutional clients worldwide.
About the Principal Financial Group
The Principal Financial Group(R) (The Principal(R))4 is a retirement and global asset management leader. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, investment services and insurance through its diverse family of financial services companies. A member of the FORTUNE 500(R), the Principal Financial Group has $327.4 billion in assets under management5 and serves some 16.4 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.
IPGL Limited is a group holding company, in which Michael Spencer, Chairman of IPGL Limited, and Chief Executive of ICAP plc, together with his wife and family trusts, are majority shareholders. IPGL's holdings include ICAP plc, the world's largest inter-dealer broker listed on the London Stock Exchange (Code:IAP) ; City Index, a market leading provider of contracts for difference for retail investors; Governance for Owners Group LLP, an investment manager dedicated to long term shareholder value; and in AIS, the hedge fund administrator headquartered in New Jersey. IPGL's holding in Origin was made by its wholly owned subsidiary, Allerton Investments BV. For more information, visit www.ipgl.co.uk.