In a statement on the ASX yesterday, Treasury Group (which owns a 42 per cent stake in Orion as part of its stable of boutique managers) said Orion’s management had decided to restructure the firm.
Speaking to InvestorDaily, Treasury Group chief executive Andrew McGill was quick to point out the decision was instigated by Orion management and then approved by Treasury Group.
Treasury Group only has ‘negative controls’ over Orion, which effectively means it has to power to veto decisions, said Mr McGill.
“We agree that in the circumstances that it’s the right course to take,” he said.
There were a “range of factors” that prompted Orion to make changes, including the recent reduction in the fund's funds under management, said Mr McGill.
“The reality economically for us is that with the loss of FUM at Orion in recent years the financial contribution from Orion had already diminished,” he said.
As a result, the announcement will not change the “existing reality” at Treasury Group, he said.
Orion currently has $3.67 billion in FUM, with an existing Australian equities retail fund, a distribution agreement with Trilogy Global Advisors’ global developed and emerging markets equities products.
“Even though the decision in relation to the wholesale or institutional side of the funds management business has been taken, the retail funds management business is continuing, as is the distribution alliance with Trilogy,” said Mr McGill.
“Orion does remain profitable, and with the Trilogy relationship we see that continuing for a long time into the future,” he said.
