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Australian Ethical (ASX: AEF) is set to upsize its fixed income business after striking a binding deal with Australian Unity to buy Altius Asset Management, an a move that will lift the group's funds under management (FUM) by 19 per cent to $12.3 billion.
Altius was co-founded by Bill Bovingdon, Chris Dickman and Gavin Goodhand as a joint venture with Australian Unity in 2011.
The $2 billion FUM uplift is similar in size to what was absorbed by the merger with Christian Super in 2022, and will make Australian Unity one of Australian Ethical's largest institutional clients.
Australian Ethical will pay Australian Unity $4.25 million once the transaction is completed, and another $1.25 million if certain transition steps are taken and minimum FUM targets are met.
The combined sustainable fixed income team from bringing Altius into the Australian Ethical fold will increase to seven, with the buyer noting the proposed acquisition is consistent with a strategy to serve the growing potential addressable market created by the structural drivers favouring responsible investing.
"The acquisition of leading fixed-income fund manager Altius is another important milestone for Australian Ethical as we scale and broaden our investment capability consistent with our strategy and Ethical Charter," says Australian Ethical chief executive officer John McMurdo.
"Transactions such as this add to our momentum as a purposedriven business and our ability to deliver sound investment returns while influencing progress towards a better future for people, animals, and planet.
"We are delighted to welcome the Altius team, their clients, and Australian Unity as a key institutional client partner. They join 130,000 investors and superannuation customers who have also chosen to invest ethically."
Australian Ethical chief investment officer (CIO) Ludovic Theau says the acquisition also signifies an ongoing commitment to work with like-minded organisations.
"We look forward to this being the first of many new investment initiatives, where Australian Ethical and Australian Unity can combine their leadership capabilities in ethical investment management and social impact best market practice," Theau says.
Altius co-founder and CIO Bill Bovingdon says clients will be at the centre of considerations as the group works closely with Australian Unity on a successful transfer of funds.
"We are excited by the opportunity to join Australian Ethical, the market-leading ethical investment platform, and to combine Altius’ deep expertise in responsible fixed income with Australian Ethical’s ethical investing heritage across asset classes," Bovingdon explains.
"The transaction is an endorsement of the sustainable investment approach Altius and Australian Unity have built and refined for more than a decade, achieving continuity, additional scale and focus for the Altius business," adds Australian Unity Group CIO Dr Joe Fernandes.
"The transaction with Australian Ethical aligns with Australian Unity’s strategy of partnering to accelerate its ambitions and focusing our commercial portfolio to areas where we can maximise impact."
Under the deal terms, Altius' co-founders Bovingdon, Dickman and Goodhand will join the Australian Ethical investment team under CIO Ludovic Theau.
Altius, as part of Australian Ethical’s expanded fixed income capability, will continue to oversee Australian Unity’s cash and fixed interest portfolios, as well as the other fixed income funds and mandates currently managed by Altius.
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