Ethical fund manager Hunter Hall Limited has entered a merger agreement with Pengana Capital, which will result in a business with combined funds under management of $3.1 billion.
In a statement released to the ASX, Hunter Hall (HHL) said it would effect the merger by acquiring all the shares in Pengana Capital (Pengana) in return for the issuance of roughly 74.1 million HHL shares to Pengana shareholders.
HHL shareholders will own around 27 per cent of the new business, Pengana Capital Group, with the remaining 73 per cent held by Pengana shareholders.
Speaking to InvestorDaily, Pengana chief executive Russel Pillemer said the two businesses “fit together extraordinarily well” due to their similar target markets, and that HHL’s ethical frameworks would “absolutely continue”.
“Pengana’s got a very strong distribution network and we’ve experienced very strong growth over the last 3½ years – it’s been north of 28 per cent per annum,” Mr Pillemer said.
“On the Hunter Hall side, those funds have been stable over the past few years, really taking the Pengana engine and putting it behind the Hunter Hall funds will result in setting those funds up for growth as well.”
Washington H. Soul Pattinson, which was one of two businesses (along with Pinnacle Investment Management) to issue a takeover bid for HHL, also has a 37 per cent stake in Pengana, and coupled with its existing 20 per cent stake in HHL will mean the divsersified investment house will have (when accounting for the dilutionary effect of the merger) a 32 per cent stake in the new business.
HHL chair Kevin Eley said that the company’s board believed the merger was the best decision for the business and recommended the shareholders wait until receiving the independent experts’ report into the takeover offers before taking any action.
“We believe [the report] should be out within the next four weeks, and there’ll be a lot more information in that report,” he said.
Pengana Capital Group will be chaired by former Colonial First State Global Asset Management chief executive Warwick Negus, the company said, with Mr Pillemer to serve as CEO of the new business, and Mr Eley staying on as a member of the board.