Consolidation in the fund man- agement industry got anoth- er jolt in early October withnews that Trian Fund Management hastaken a 9.9% stake in both Invesco andJanus Henderson.
According to Trian’s filings with theSecurities and Exchange Commission,Trian has acquired 45. 46 million sharesin Invesco worth about $493.6 millionand about 18 million shares of JanusHenderson, worth about $387.6 million,or about $881 million in total.
Both stocks surged Oct. 2 on thenews, with Invesco shares up 6.3% inearly afternoon and Janus Hendersonshares soaring close to 16% higher.
Trian did not reveal its plans for thestakes and would not comment beyond itsSEC filings, but The Wall Street Journal,which broke the news, reported thatTrian believes Invesco has the potentialto grow by acquiring Janus Hendersonand becoming a stronger competitor tolarger asset managers like BlackRock.Trian Fund Management is the investment arm of Trian Partners, founded byNelson Pelz, Ed Garden and Peter May.
Both target firms have been makingtheir own acquisitions and are known fortheir actively managed funds. Invescoacquired OppenheimerFunds last springand the ETF business of GuggenheimInvestments in spring 2018. JanusHenderson itself was formed in May2017 when the U.K.-based HendersonGroup acquired Denver-based JanusCapital Group.
A merger between Invesco and Janus
Henderson could benefit their investors
because their investment fees are likely to
fall, said Todd Rosenbluth, senior direc-
tor of ETF and mutual fund research at
CFRA. He noted, however, that a pruning
of mutual fund and ETF choices often
follows mergers due to overlap.
A merger between the two fund companies could also provide a catalyst formore deals among asset managers focusedon active management as more moneymoves from mutual funds to ETFs, saidRosenbluth. He said smaller firms facethe greatest risk from more consolidationin the industry due to challenges on priceand on retaining and attracting investors.
Greggory Warren, a financial ser-
vices sector strategist at Morningstar,
also expects more consolidation in the
fund industry because “the quickest way
for firms to combat the fee and mar-
gin compression affecting the industry
(other than cost-cutting) is to bulk up
But he expects that this “scale-driven
consolidation” will involve “mid-tier
asset managers,” with $250 billion-$750
billion in assets, swallowing up those
with $25 billion-$250 billion to better
compete in a market dominated by big
players. (As of the end of June Invesco
had over $1.14 trillion in AUM; Janus
Henderson, $337 billion.)
That deal “would only make sense
if Invesco were able to acquire Janus
Henderson on the cheap” since Janus
Henderson has a much heavier equity
footprint, which risks outflows in any
sort of merger situation, wrote Warren
in a note following the Trian news.
“As we move through the next decadethe strong are going to get stronger andthe big are going to get bigger… [but]being both large and strong will prove tobe difficult (especially on the active sideof the business where it gets harder andharder to outperform the larger a fundgets in size),” wrote Warren.
FIRST ETF TO ‘BLANK CHECK’
Defiance ETFs has launched the firstETF that tracks special purpose acquisition companies (SPACs), which are shellcompanies that have no operations andraise capital through initial public offerings for the sole purpose of acquiringone or more companies with existingoperations. SPACs also are known as“blank check” companies.
They have been around for decadesbut are having a record-breaking year in2020, raising over $41 billion, accordingto Bloomberg.
The Defiance Next Gen SPACDerived ETF trades on the New YorkStock Exchange under the symbol SPAKand has a 0.45% net expense ratio.
SPAK “allows both financial advisors and retail investors to participatein an IPO private equity style of investing, which until now, was only available to large financial institutions,”Defiance said.
Bernice Napach can be reached email@example.com.
By Bernice Napach
Invesco and Janus Henderson Getting Bought?
Nelson Peltz’s investment firm, Trian, reportedly wants to merge the two
companies to rival giant asset managers like BlackRock.