Henderson Global Investors is to acquire Geneva Capital Management. Founded in 1987, Geneva Capital Management is a US growth equity manager with assets under management of $6.3 billion as at 31 May 2014.
Henderson Global Investors (“Henderson”, “the Group”) has entered into an
agreement to acquire the entire issued share capital of Geneva Capital Management
(“Geneva”). Founded in 1987, Geneva has assets under management (“AUM”) of
US$6.3bn¹ in Mid- and Small-Cap US growth equities.
An important strategic milestone in the development of Henderson’s
North American business
Geneva will add US equity investment capabilities and extend US institutional
Initial consideration of US$130m; deferred consideration linked to revenue
retention of up to US$45m; and growth-related earn-out of up to US$25m
Expected to be underlying earnings accretive in the first full year post
North American business update
Henderson’s North American business continues to grow rapidly, doubling its
AUM since 20112
In May 2014, the US Mutual fund range reached US$10bn for the first time,
with net inflows of US$1.4bn in the year to date3
A US based institution awarded a significant new mandate to the Henderson
Global Equity team in May 2014
Having joined in 2013, the US high yield team has achieved 2nd percentile
investment performance in its first full year of operation. Investment grade
expertise has been added to the team to expand Henderson’s US and global
The acquisition of Geneva will enable Henderson to continue to build its North
1 As at 31 May 2014.
2 From US$5.9bn as at 31 December 2011 (excluding assets transferred to TIAA Henderson Real Estate as part
of the property related transactions completed on 1 April 2014) to US$12.0bn as at 31 May 2014.
3 Five months to 31 May 2014.
Acquisition of Geneva Capital Management
Accelerates delivery of Henderson’s strategy to grow and globalise its
- Post acquisition, the North American business will have approximately
US$18.3bn4 of AUM, representing nearly 15% of the Group on a
pro forma basis
Geneva’s investment expertise in US growth equities fills an important
capability gap for Henderson
- Geneva has a long track record in managing Mid- and Small-Cap growth
equities, underpinned by a disciplined and consistent investment process
- The addition of Geneva will double Henderson’s number of US-based
The acquisition will transform Henderson’s North American presence,
bringing proven institutional distribution capabilities to complement
Henderson’s successful retail franchise
- The acquisition will quadruple Henderson’s US institutional AUM5
- It will create a well-balanced client base, split broadly equally between
retail and institutional
Geneva’s principals have signed long-term employment contracts and have
agreed to reinvest at least 30% of net sale proceeds into Geneva products
There is a strong cultural fit between the two firms and Geneva principals will
become valued members of Henderson’s equity and North American
Over time, the transaction creates opportunities to build new products with US
content (e.g. Global Small-Cap and US All-Cap); launch new US equity retail
products; and market Henderson capabilities more actively to US institutions.
4 Based on Henderson US AUM as at 31 May 2014 and Geneva AUM as at 31 May 2014.
5 To around US$8bn.
Andrew Formica, Chief Executive of Henderson, said: “Developing our presence
in North America is a strategic priority for Henderson. The acquisition of Geneva is a
major step towards achieving our growth ambitions as a global asset manager. It will
increase our assets under management in the US by over 50%, add investment
management expertise in US equities and extend our US institutional client base.
“We look forward to working with the Geneva team, to ensure that all of our clients
benefit from our new partnership. Henderson clients will gain access to Geneva’s
strong track record in identifying high quality growth companies in US equities, while
Geneva clients will continue to benefit from a stable team and an unchanged
investment process, now backed by a global pure play asset manager.”
Amy Croen, Co-Founder and Managing Principal of Geneva, said: “The team at
Geneva is excited to join Henderson. With the backing of a strong international
partner who is very supportive of our existing investment strategy and platform, we
look forward to taking our business to the next stage of its development.
“On behalf of our clients, we will continue to apply the same consistent investment
approach and process that have generated strong risk-adjusted returns since our
foundation in 1987.”
The consideration is structured in three tranches.
Up front consideration of US$130m
Deferred consideration of up to US$45m, payable over five years after closing
if revenue retention targets are met
Earn-out of up to US$25m, payable over five years after closing if Geneva
achieves stretch targets in relation to revenue growth.
This consideration will be fully funded from Henderson’s existing cash resources.
Transaction and integration costs are expected to be around US$10m, the majority of
which will be incurred in 2014.
This transaction is expected to generate single digit underlying EPS accretion in the
first full year post close and returns greater than the Group’s cost of capital.
Henderson currently operates under a regulatory capital waiver, which will remain in
place until April 2016. Taking into account the effects of this transaction, Henderson
expects to meet its capital requirements without recourse to the waiver during 2015.
This transaction is expected to close on 1 October 2014, subject to customary