Magellan Financial Group shareholders have overwhelmingly backed the $903 million Barrenjoey Capital Partners merger.
On 2 March, Magellan detailed in an ASX announcement its plans to merge with the investment banking firm of which it had been a founding partner back in 2020 with a 40 per cent stake.
The deal would see Magellan acquire 100 per cent of Barrenjoey shares it doesn’t already own at the time of completion with an implied total consideration of $903 million for the stake to be acquired through the issuing of new Magellan shares to Barrenjoey shareholders.
On 10 April, Magellan held an extraordinary general meeting (EGM) with shareholders to vote on the issuance of 106,838,520 fully paid ordinary shares by Magellan to the Barrenjoey Parties and an affiliate of Barclays.
The vote was approved by 91 per cent of shareholders, according to ASX filings.
Reiterating the arguments in favour of the deal, chairman Andrew Formica said the transaction is building on four key strategic benefits:
- Improved diversification and resilience,
- Enhanced client proposition,
- Talent and culture,
- Balance sheet strength and growth capacity.
Focusing on the first point, Formica said the group post-merger will have a significantly broader earnings space across investment management, markets, advisory, and capital market which will provide greater stability and resilience for the business through varying market conditions.
“In a relatively short period, Barrenjoey has established itself as a leading Australian financial services business, with strong positions across advisory, capital markets, equities, fixed income and private capital.
“We believe that the proposed merger represents the natural next step in this partnership. It enables MFG shareholders to move from partial economic participation in Barrenjoey to full ownership, allowing us to fully participate in any future growth and value creation.
“MFG post-merger will see two highly complementary businesses combine to create a diversified, client-focused financial services group with significant scale.”
This comes after Magellan faced challenges in the December quarter, reporting $300 million in outflows with institutional inflows of $200 million being offset by $500 million in retail outflows.
With the deal going ahead, non-executive director David Dixon, who joined the firm in 2022, will step down from the board upon completion with Paul Compton set to take his place.
Compton is chairman of investment banking and a non-executive director at Barclays, another foundational investor in Barrenjoey.
Upon completion, Barclays will also receive a 4.9 per cent voting interest in Magellan and the final balance to be paid in cash funded by the share placement plan (SPP) held in March.
Formica explained that this is because a 5 per cent or higher interest would see Magellan subject to “increased regulatory oversight, particularly in the US, linked to Barclay’s ongoing regulatory requirements”.
While still subject to regulatory approval, Magellan expects the deal to be completed around mid-2026.
