Jupiter Fund Management has confirmed it is in advanced talks to buy fellow UK group Merian Global Investors in a deal that is expected to be announced as early as next week.
The deal would be the first significant acquisition for Andrew Formica, chief executive of Jupiter, whose appointment by the FTSE 250 group last year was widely expected to lead to M&A activity. Mr Formica forged a reputation at Henderson Global Investors for dealmaking, which culminated in the merger with Janus Capital in 2016.
Merian, which was created through a management buyout of Old Mutual Global Investors in 2018, was led by UK stockpicker Richard Buxton until he stepped back from running the business last year. He is still its most prominent fund manager.
A person briefed on the talks told the Financial Times that Mr Buxton and the other senior portfolio managers at Merian would move to Jupiter, with full details due to be released when the deal is announced.
Jupiter would pay less than £500m in a cash and stock, according to Bloomberg, which first reported the deal.
In a statement on Saturday morning, Jupiter said: “While discussions have been under way for some time and the boards of both Jupiter and Merian are confident that the combination would have the potential to deliver meaningful benefits for the stakeholders of both businesses, discussions are ongoing and there can be no certainty these will lead to a transaction, nor as to the terms on which any such transaction would be concluded.”
Jupiter and Merian suffered heavy outflows last year, with the active managers losing business to large US passive fund houses. The new group would have just over £65bn of assets under management.
During a capital markets day in December, Mr Formica said he would focus on expanding Jupiter’s range of active funds and recruit talented investment managers.
Last year he said Jupiter’s growth would come from attracting disenfranchised managers from other groups.
“We are inundated with CVs, we can pick up the phone to some very high profile fund managers who are very interested in talking to us because they just genuinely want to engage and understand what it’s like here,” he said. “There is a lot of disruption now in other firms and that is the sort of thing we’re doing.”
Last year Jupiter failed to convince star manager Alexander Darwall to stay. He subsequently set up his own investment business, bringing more than £1bn of client money with him.
Since arriving, Mr Formica has set about closing several underperforming funds at Jupiter, including a small absolute return fund this month after it lost 20 per cent in the first six months of the year.
A person briefed on the deal with Merian said it was designed to improve efficiencies and scale, with fund consolidation between the two group’s line-ups expected.
TA Associates, the private equity firm that backed Mr Buxton’s management buyout of Merian, played a similar role when Jupiter was spun out from Commerzbank in 2007. Mr Buxton sounded out Edward Bonham Carter, who led the Jupiter buyout, when considering working with TA Associates.