BrightSphere has agreed to sell its 75.1 percent ownership stake in Barrow Hanley, an investment manager, to Perpetual Limited for $319 million. Also, BrightSphere has agreed to sell its equity stake in Copper Rock, an asset manager, to Spouting Rock Asset Management LLC and Copper Rock management. The after-tax proceeds from this transaction is estimated to be about $15 million.
BOSTON–(BUSINESS WIRE)–BrightSphere Investment Group Inc. (NYSE: BSIG) today announced that it has entered into definitive agreements to sell its interests in affiliates Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow Hanley”) and Copper Rock Capital Partners, LLC (“Copper Rock”).
BrightSphere has entered into a definitive agreement to sell its 75.1% ownership interest in Barrow Hanley to Perpetual Limited (ASX: PPT), an Australian publicly listed financial services company, for $319 million. In addition, Perpetual Limited will redeem BrightSphere’s seed capital investments in Barrow Hanley strategies at closing, which had a market value of approximately $44 million as of June 30, 2020. BrightSphere anticipates utilizing a portion of its deferred tax assets to off-set cash taxes associated with the transaction, resulting in total expected after-tax proceeds of approximately $320 million including the seed capital.
As of June 30, 2020, Barrow Hanley, a value oriented investment manager with a 40-year track record, had assets under management of $44 billion and estimated year to date GAAP net income attributed to controlling shareholders and Adjusted EBITDA of $17 million and $20 million, respectively1. The transaction is subject to customary regulatory approvals and closing conditions and is anticipated to close in the fourth quarter of 2020.
Separately, BrightSphere has agreed to sell its equity interests in Copper Rock to Spouting Rock Asset Management LLC and Copper Rock management. BrightSphere anticipates total after-tax proceeds from this transaction of approximately $15 million, including seed capital but excluding upside sharing arrangements.
Suren Rana, BrightSphere’s President and Chief Executive Officer said, “Following the transactions, our pro forma business will be much more focused on our diversified quantitative and secondary private market strategies and will have a history of consistently generating positive net flows.”
“Additionally, these transactions highlight the high intrinsic value embedded in our businesses relative to our stock’s current trading levels. Proceeds from these transactions will allow us to pay down debt and return capital to shareholders through repurchases, which could result in double digit accretion to 2021 ENI per share while also providing capital to support the continued growth of our remaining affiliates by seeding new strategies.”
“Finally, I would like to thank our talented teams at Barrow Hanley and Copper Rock for their contributions to our business all these years by relentlessly serving their clients. They are landing in synergistic homes committed to their continued progress and we wish them well in their future initiatives.”
Morgan Stanley acted as exclusive financial advisor to BrightSphere in connection with the sale of Barrow Hanley. Ropes & Gray LLP served as the legal advisor.
BrightSphere will host a conference call to discuss the transaction at 11:00 A.M. Eastern Time on July 27, 2020. Participants may dial (844) 445-4807 (domestic) or (647) 253-8636 (international) and use the conference ID 1158056. In addition, a copy of the presentation slides to be presented on the conference call are also available at ir.bsig.com. A replay of the call will be available beginning approximately one hour after its conclusion either on BrightSphere’s website, at ir.bsig.com or by dialing (800) 585-8367 (domestic) or (416) 621-4642 (international) conference ID 1158056.
BrightSphere is a diversified, global asset management company with approximately $162 billion of assets under management as of March 31, 2020. Through its world-class investment management Affiliates, BrightSphere offers sophisticated investors access to a wide array of leading quantitative and solutions-based, private and public market alternative, and liquid alpha strategies designed to meet a range of risk and return objectives. For more information, please visit BrightSphere’s website at www.bsig.com. Information that may be important to investors will be routinely posted on our website.