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Daily Grime - JUP; SHRE

ByJeremy Grime
Published 17/02/2020, 09:20
Updated 09/07/2023, 11:32

News

  • Intu Struggling to fathom what made the Remuneration committee think this is a good time to boost the potential LTIP awards this morning

  • CLIG announced they would put results out today. Nothing yet.

  • Ninety One (Investec Asset Management) announces its intention to float.

    • Jupiter Fund Management (LON:JUP) – Acquisition

    Share Price 397p

    Mkt Cap £1,815m

    Conflict Disclosure: No Holding

  • Statement Over the week end it emerged that Jupiter is in advanced talks to but Merian Global Investors, confirmed this morning. Price is £370m up front with £20m deferred and Merian bring net debt of £29m equating to EV/AUM of 1.9%. TA Associates acquired Merian a little over 2 years ago, paying £600m for a majority stake. Back then the AUM was £30bn. Jupiter’s AUM back then was £50.2bn and Jupiter hasn’t yet disclosed its Dec 19 AUM but last September it stood at £45.1bn.

  • Cost savings The underlying EPS accretion is said to be low to mid-teen accretion. Based of Jupiter reveues of £377m and Merian’s management fees of £140m that suggests c£60m cost savings from 2021 and increasing from 2022. The one off cost is expected to be £40-£45m.

  • Valuation Forecasts for Dec 2021 are for 27.7p EPS. If we accrete this by 12% for the cost savings that puts the shares on 12.8X. Premier Miton trades at 11.6X ahead of achieving their 27% accretion from the costs savings on their merger.

  • Strategic Henderson/Janus, Aberdeen/Standard Life, Liontrust/Neptune, Premier/Miton, the list of squeezed fund managers combining is growing. While a new breed of specialists is emerging. Gresham House, Intermediate Capital, Impax, Arrow Global, and First Property seem to be the emerging highly specialist fund managers.

  • Conclusion This may improve fund diversification and achieve cost savings but is unlikely to improve flows in the short term. There has been no disclosure by Jupiter of flows in the quarter to December, but that maths tells us that AUM declines by c £2.5bn in Q4 (5.5%) in a quarter when markets where strong. There are cheaper, more transparent, and recovering fund managers to own. Underwhelming.

    • Share Plc (LON:SHRE) – Bid

    Share Price 29p

    Mkt Cap £42m

    Conflict Disclosure: No Holding

  • Bid Interactive Investor makes a (90%) paper offer valuing the company at 41p, or £60m, (assuming ii’s private company valuation of £675m).

  • Valuation At 29p Share Plc trades at a PE of 41X and brings £5.3bn AUM with £22.8m revenues. The statement refers to shares values but to make financial sense significant cost savings, which aren’t mentioned, must exist. Alongside some useful tools and benefits of scale.

    • Conclusion This looks a useful deal for both parties. The benefits of scale are huge. Note that Augmentum Fintech’s H1 results in December valued their 3.7% stake in ii at £14.8m implying a £400m value for Interactive Investor. Augmentum could be pregnant with a £10m write up.

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