- Approximately $335 million of expected after-tax proceeds from
the divestitures enabling us to reduce debt and repurchase shares,
which could generate double digit accretion to 2021 ENI per share,
while also allowing us to further support affiliate growth by
seeding new strategies
- Improved organic growth profile as pro forma business has
historically generated positive net flows
- Valuation received underscores high intrinsic value of the
company’s businesses relative to the company’s current trading
levels
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”).
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the full release here:
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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.
About BrightSphere
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.
Forward Looking Statements
This press release includes forward-looking statements,
including those related to the after-tax proceeds from our
disposition of Barrow Hanley, the expected closing date of the
transaction, Barrow Hanley’s financial results for the six months
ended June 30, 2020, our liquidity and use of capital resources,
including share repurchases and expected ENI per share accretion,
and the performance of our Affiliates. The words or phrases
“expect,” “anticipate,” “estimate,” and other similar expressions
are intended to identify such forward-looking statements, but the
absence of these words does not necessarily mean that a statement
is not forward-looking. Such statements are subject to various
known and unknown risks and uncertainties and readers should be
cautioned that any forward-looking information provided by or on
behalf of the Company is not a guarantee of future performance.
Actual results may differ materially from those in
forward-looking information as a result of various factors, some of
which are beyond the Company’s control, including, but not limited
to, those discussed in the Company’s most recent Annual Report on
Form 10-K, filed with the Securities and Exchange Commission on
March 2, 2020, Quarterly Report on Form 10-Q, filed with the
Securities and Exchange Commission on May 11, 2020, and subsequent
SEC filings, including risks related to the disruption caused by
the COVID-19 pandemic, which has and is expected to continue to
materially affect our business, financial condition, results of
operations and cash flows for an extended period of time, as well
as those related to the expected closing of the transaction, the
timing of such closing and the satisfaction of necessary closing
conditions. Due to such risks and uncertainties and other factors,
the Company cautions each person receiving such forward-looking
information not to place undue reliance on such statements.
Further, such forward-looking statements speak only as of the date
of this press release and the Company undertakes no obligations to
update any forward looking statement to reflect events or
circumstances after the date of this press release or to reflect
the occurrence of unanticipated events.
Non-GAAP Financial Measures
This communication contains non-GAAP financial measures.
Reconciliations of GAAP to non-GAAP financial measures are included
in the Appendix of this communication. Adjusted EBITDA is defined
as economic net income before interest, income taxes, depreciation
and amortization. The Company notes that its calculation of
Adjusted EBITDA may not be consistent with Adjusted EBITDA as
calculated by other companies. The Company believes Adjusted EBITDA
is a useful liquidity metric because it indicates the Company’s
ability to make further investments in its business, service debt
and meet working capital requirements.
BSIG 2020031
1 See our investor presentation, Brightsphere Announces
Divestiture of Two Affiliates – Barrow, Hanley, Mewhinney &
Strauss, LLC and Copper Rock Capital Partners, dated July 26, 2020,
for a reconciliation of Adjusted EBITDA to U.S. GAAP net income
attributable to controlling interests for the six months ended June
30, 2020.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200726005031/en/
Elie Sugarman ir@bsig.com (617) 369-7300
BrightSphere Investment (NYSE:BSIG)
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