American asset manager Federated Investors has agreed to acquire a 60% stake in British peer Hermes Fund Managers for £246m ($350m).
Hermes, which operates Hermes Investment Management, offers strategies in high-active share equities, credit as well as private markets.
Federated will buy the stake from BT Pension Scheme (BTPS), which will continue to hold a 29.5% stake in Hermes. Moreover, certain management team members of Hermes will own an aggregate 10.5% stake in the firm.
The deal, funded through cash and an existing revolving credit facility, will also allow Federated to buy and BTPS to sell additional shares over the next three to six years under put/call provisions.
Hermes will become a subsidiary of Federated upon deal completion and will remain based in London. The merged entity would have around $442.2bn in assets.
The British fund manager will also retain its existing board, which will include an independent non-executive chairman, two more independent non-executive directors, along with representatives from Federated, BTPS and Hermes.
The deal already secured the nod from the boards of Federated and BTPS. It is anticipated to close in the second half of this year, subject to regulatory approvals.
Federated president and CEO J. Christopher Donahue said: “The agreement with BTPS brings to Federated great people, a growing global client base, a history of strong performance and one of the world’s leading active ESG investment and engagement businesses.
“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. In addition, Hermes’ capabilities and client relationships in the U.K., the rest of Europe and the Asia-Pacific region significantly broaden Federated’s distribution capabilities.”