Magellan acquires stake in investment firm Vinva for $138.5 million

Magellan has purchased the stake in Vinva Holdings, the parent company of privately-owned Vinva Investment Management which has $22 billion in funds under management (FUM), largely for Australia-based clients.

This compares to an average FUM of $36.8 billion for Magellan itself at the end of FY24 - a figure that was down by a quarter on the previous year.

Vinva was established in 2010 by its managing director and chief investment officer (CIO) Morry Waked, who was previously the CIO of active equities at Barclays Global Investors where he was responsible for approximately $300 billion in global systematic equities.

The majority of Vinva's 28-strong team previously worked alongside Waked at Barclays.

Magellan's executive chairman Andrew Formica has been appointed as a non-executive director of Vinva as part of the partnership, while Magellan will distribute Vinva’s products and investment strategies through its global distribution team.

The two companies also plan to collaborate on new product initiatives in Australia and globally.

"We are delighted to partner with Vinva, in what we see as the coming together of two culturally aligned businesses focused on delivering for clients," says Formica.

"The Vinva team are experts in insight-driven systematic equity investing with significant intellectual property in their business, developed over decades of investing in global equity markets.

"We have long admired and respected the business and are pleased to extend our strategic partnership through being both a supportive minority shareholder and distribution partner."

Magellan highlights Vinva's "long and consistent track record of outperformance and strategy capacities", and believes that through their global distribution partnership its funds under management can grow considerably in the coming years.

"Vinva is a high quality and scalable business with significant growth potential globally," says Magellan Asset Management managing director Sophia Rahmani.

"As part of Magellan’s commitment to provide our clients access to investment excellence, we are delighted this strategic partnership enables us to bring Vinva’s innovative investment solutions to our clients."

Waked says the partnership Vinva to leverage Magellan's extensive distribution network to accelerate its strong growth prospects, while ensuring it remains focused on its "passion of delivering consistent outperformance" to clients.

"We are pleased to welcome Magellan as a strategic partner. The entire Vinva team is proud of the business we have built over the last 14 years, and today’s announcement marks the next step in our journey," he says.

The news comes as Magellan reports a 31 per cent lift in net profit after tax (NPAT) to $238.8 million for FY24, amidst its highest performance fees since FY21 thanks to the performance of its investment strategies, and a 16 per cent year-on-year reduction in costs.

"Magellan has made significant progress in FY24, restoring stability across our business and establishing the foundations for future growth," Formica explains.

"Our financial results reflect the resilience of our business following a challenging few years. As of 30 June 2024, our funds under management (FUM) stood at $36.6 billion, diversified across three high quality investment strategies, and rose to $38.4 billion as at 31 July 2024.

"Net flows have continued to stabilise in both retail and institutional channels, and we have secured significant client wins. Particularly pleasing is seeing a return in the institutional channel, demonstrating the confidence new and existing clients retain in Magellan."

He adds the share of NPAT from associates was $11 million, representing a material improvement on the $11.5 million loss in FY23.

"Importantly, we addressed several legacy issues that have helped to restore stability to the business and position us for future success," he says.

"These include successfully implementing transitional leadership arrangements, resolving the Employee Share Purchase Plan loans for our staff and introducing a new remuneration framework, as well as converting the Magellan Global Fund Closed Class into the Open Class."

He says that it is after delivering on these important initiatives that Magellan is now focused on strategic growth objectives, including the deal with Vinva.

"The partnership will see Magellan bring Vinva’s innovative product solutions to our clients and we have taken a strategic equity stake in the business, which we consider has significant growth potential," he says.

"We also announced a refreshed US distribution platform which will lay down the foundation for future growth in this important market. We continue to work on our existing capabilities to make sure they remain relevant and deliver for our clients in both the retail and institutional market.

"While there is still work to be done, our financial position is strong, we have consistently generated robust operating cashflows and are highly profitable. This resilience and strength enables us to continue paying attractive dividends to shareholders while also investing for the future."

MFG shares rose by 8.35 per cent to $10.51 this morning following the investment and profit announcements.