Magellan has announced it will become a foundation investor in a new Australian-based financial services firm led by UBS’ former top deal-maker.
Barrenjoey will provide corporate and strategic advisory, equity and debt capital market underwritings, cash equities, research, and traditional fixed income services to Australian and international clients. It will be led by former UBS senior banker Guy Fowler as executive chairman, and John Cincotta, Matt Hanning and Chris Williams as founding partners.
“Magellan is delighted to be a founding partner of Barrenjoey,” said Magellan CEO Brett Cairns.
“We believe the partnership model that leaves control, equity ownership and core decision-making with the executives is proven and powerful. This partnership model was adopted historically by many investment banks but unfortunately seems to have disappeared over the last 20 years.”
Magellan’s investment comprises 1.2 million of its shares and $90 million of cash to take a 40 per cent economic interest in the upstart company, while also providing some $50 million in working capital. Magellan will have a 4.99 per cent voting interest, while Mr Cairns will join the board.
“This investment represents a rare opportunity to generate attractive financial returns together with meaningful optionality and diversification prospects for Magellan and its stakeholders over the long-term,” Mr Cairns said.
Barclays has also announced that it will become a foundation investor in Barrenjoey, providing $45 million for a 9.99 per cent economic stake and a 4.99 per cent voting interest. The leading US bank has entered into a co-operation agreement with Barrenjoey across global product distribution, research, and cross-border advisory while also making “significant balance sheet capacity” and additional regulatory capital available to the company.
Paul Compton, president of Barclays Bank PLC, will also join the Barrenjoey board.
“We see Australia as an attractive and important financial services location,” Mr Compton said.
“With Barrenjoey’s ambitions in the domestic market and our focus on cross-border business, we see this as a compelling strategic investment. This opportunity enables us to complement our existing presence and leverage our global infrastructure and assets, providing access to Australian opportunities for our global clients while at the same time ensuring a strong financial return for Barclays’ investment in Barrenjoey.”