2020 Open
2020 Open

Proposed acquisition of Merian Global Investors

17 January 2020

Further to the announcement on 15 February 2020 in response to press speculation, the board of Jupiter Fund Management plc (the "Jupiter Board") is pleased to announce the proposed acquisition of Merian Global Investors Limited ("Merian"), an independent active asset management firm with more than £22 billion assets under management[1] ("AUM") (the "Acquisition").


1. Summary

The Acquisition represents an opportunity to accelerate Jupiter's strategy and is expected to deliver the following key benefits:

  • Enhances Jupiter's position as one of the UK's leading active asset managers with more than £65 billion of AUM.
  • Complementary and additive acquisition aligned with Jupiter's high conviction active approach and investment culture.
  • Reinforces Jupiter's core UK franchise and extends capabilities into attractive product gaps.
  • Diversifies Jupiter's existing business with the current top 5 funds falling from 46 per cent. of AUM to 33 per cent. of the AUM of the Enlarged Group; number of funds with greater than £1 billion of AUM increasing from 10 to 16; and top 4 capabilities moving from 76 per cent. of AUM to 53 per cent.
  • Migration of Merian's investment team and assets onto Jupiter's operational platform through the execution of a clear and well-designed integration plan.
  • Substantial cost efficiencies expected to deliver low to mid-teen accretion to Underlying EPS from 2021 and increasing from 2022 onwards[2].
  • The Acquisition is consistent with Jupiter's strategic priorities and accelerates its growth plans.
  • Completion of the Acquisition is subject to the satisfaction of customary conditions including regulatory consents and Jupiter shareholder approval.


2. Transaction highlights

  • Following Completion:
  • The Purchase Price Adjustment is primarily determined with reference to Merian AUM as at 31 December 2021 (see Appendix I for further details).
  • Downside protection from a purchase price adjustment mechanism (the "Purchase Price Adjustment"), to be settled in cash, up to a maximum value of £100 million:
  • Merian will be acquired with target net debt of £29 million (assuming Completion on 1 July 2020), subject to an adjustment if net debt at Completion exceeds this figure (and with target net debt of £35 million if Completion occurs after the record date for the Jupiter 2020 interim dividend payment).
  • Jupiter is to acquire the entire issued share capital of Merian for an upfront equity consideration of £370 million to be paid through the issue of 95,360,825 new Jupiter Shares to Merian shareholders (the "Consideration Shares"), with an additional deferred earn-out of up to £20 million (the "Deferred Earn Out") payable to Key Merian Management Shareholders, subject to growing and retaining revenues in their investment strategies[3] (see Appendix I for further details).
    • Merian shareholders will own, in aggregate, approximately 17 per cent. of the enlarged share capital of Jupiter.
    • Key Merian Management Shareholders, who manage approximately 87 per cent. of total Merian AUM, will collectively own approximately 1 per cent. of the enlarged share capital of Jupiter, creating an alignment of interests with other Jupiter Shareholders.
    • Key Merian Management Shareholders have entered into full-time employment contracts with Jupiter which contain comprehensive non-compete and non-solicit obligations.
    • TA Associates Management LP ("TA") will once again become a significant long-term shareholder of Jupiter with an approximate 16 per cent. shareholding. For so long as TA holds directly or indirectly in aggregate 10 per cent. or more of Jupiter's issued share capital, TA will be entitled to nominate a non-executive director to the Jupiter Board.
    • TA, funds advised by TA and Key Merian Management Shareholders have each entered into customary lock-up agreements.
  • The Enlarged Group will have combined AUM of £65 billion as at 31 December 2019.
  • Merian AUM of £22.4 billion as at 31 December 2019 with associated estimated run-rate net management fees of approximately £140 million per annum.
  • Merian's existing debt to be assumed by Jupiter and repaid at or before Completion. Jupiter intends to issue £50 million of Tier 2 subordinated debt, resulting in combined surplus regulatory capital of approximately £70-100 million[4].
  • No change to the senior leadership at Jupiter, and one additional non-executive Board member to be nominated by TA following Completion.
  • Completion of the Acquisition is expected to occur in the second half of 2020, with the earliest expected completion date being 1 July 2020, subject to customary conditions including receipt of relevant regulatory approvals and approval by Jupiter Shareholders.


3. Client, strategic and financial rationale

The Jupiter Board believes that there is a compelling strategic and financial rationale for the Acquisition and that the Acquisition will provide attractive strategic, commercial and financial benefits to Jupiter, its clients and its shareholders as outlined below:

Client benefits

  • Significantly enhances Jupiter's UK investment capability by adding scale across the investment style and market capitalisation range.
  • Widens Jupiter's range of investment capabilities available to clients.
  • Adds scale to strategic investments in Jupiter's capabilities, for example, the build-out of Fixed Income and Global Emerging Markets.
  • Enhanced ability for Jupiter to develop and seed new strategies.
  • Provides greater opportunity to invest in the Enlarged Group; including for example the capacity to invest in technology to support alpha generation and improve client servicing.

Strategic Benefits

Enhances Jupiter's position as one of the UK's leading high-conviction active asset managers

  • The Enlarged Group, operating under the Jupiter brand, will be a leading UK active specialty manager with more than £65 billion of AUM.

Complementary and additive acquisition - involving two businesses with aligned cultures and investment philosophy - which will not alter Jupiter's purpose and focus

  • Jupiter and Merian share a commitment to high-conviction, active asset management with no imposed house view, providing fund managers with the freedom to make investment decisions, reinforcing Jupiter's position as an attractive home for leading investment talent.                                
  • Merian's active investment approach is evidenced by its long-term investment performance track record, with approximately 53 per cent. of Merian AUM above median over 3 years[5]and approximately £8 billion of AUM top decile over 10 years[6].
  • Both firms have a long track record of delivering attractive returns for clients, with the Enlarged Group having approximately 66 per cent. of AUM above median over three years[7].

Reinforces Jupiter's core UK franchise by broadening its UK capabilities and strengthening its UK retail distribution presence

  • Adds to Jupiter's capabilities in UK equities, bringing additional expertise in UK all-cap growth and small / mid-cap strategies and complementing Jupiter's strong Value franchise.
  • Creates the second largest manager of retail funds in the UK with approximately £40 billion AUM[8].

Strengthens and diversifies Jupiter's client base with distinct client sets in international markets, particularly the Middle East, APAC and Latin America / US Offshore

  • Limited institutional client overlap, adds new relationships with leading global institutions and sovereign wealth funds.
  • Provides meaningful AUM in geographies including the Middle East, APAC and Latin America / US Offshore.
  • Subject to the approval of the independent board of Merian Chrysalis, it will add scale and capability to Jupiter's investment trust business. 

Extends Jupiter's capabilities into attractive product gaps with growth potential and adds scale to other existing capabilities

  • Adds attractive investment capabilities such as Global Systematic Equity, Liquid Alternatives and Contingent Capital and increases scale in growth areas such as Emerging Market Debt, Multi-sector Bonds, Corporate Bonds and Equity. 

Delivers improvement in fund diversification

  • The Acquisition will meaningfully improve Jupiter's fund diversity, with the proportion of AUM managed by its largest five funds falling from approximately 46 per cent. to approximately 33 per cent. of the Enlarged Group's AUM following Completion.
  • The number of funds with AUM above £1 billion increases from 10 to 16.
  • Top 4 investment capabilities move from 76 per cent. of Jupiter AUM to 53 per cent. of the Enlarged Group AUM following Completion. 

Increases Jupiter's capacity to invest, positioning the business better to execute its growth agenda

  • Provides greater scale and the financial resources with increased capacity to invest in future growth, particularly through recruitment of investment talent, the expansion of Jupiter's distribution footprint and the development of new products for the benefit of clients.
  • Better positions Jupiter to invest in the growth of its international, institutional and investment trust capabilities and execute its strategic priorities to diversify the business by channel, geography and product.

Financial Rationale

Compelling financial benefits for Jupiter Shareholders

  • Attractive value creation opportunity for Jupiter Shareholders, underpinned by significant cost saving from removal of operational overlap and duplication within the Enlarged Group.
  • Expected to deliver low to mid-teen accretion in Underlying EPS from 2021, and increasing from 2022 onwards[9], with returns to Jupiter in excess of its cost of capital.
  • Following completion of the integration of the Merian business and extraction of the anticipated cost synergies, on a fully-phased basis, the Jupiter Board expects the acquired business to have the potential to contribute to an Operating Margin[10]not below 50 per cent. on prudent asset level assumptions and up to 60 per cent., which compares with Jupiter's 2019 Operating Margin of 43 per cent.
  • Based on December 2019 run-rate revenues, it is anticipated that shortly following Completion, the Operating Margin of Merian would be close to 50 per cent.
    • This Operating Margin can be delivered while maintaining a compensation ratio in line with current Jupiter levels. 

Clear integration plan

  • Merian's business to be fully integrated and migrated to Jupiter's scalable operating platforms, which have benefited from substantial recent investment.
  • Clear and well-designed integration plan to deliver cost savings whilst ensuring stability, overseen by Jupiter's experienced management team.
  • The Enlarged Group will operate under the Jupiter brand.
  • One-off and integration costs estimated to be £40-45 million, substantially all of which are expected to be incurred in the first 12 months post-Completion.



The Jupiter Board has received financial advice from Fenchurch Advisory Partners LLP and J.P. Morgan Cazenove in relation to the Acquisition. In providing its financial advice to the Jupiter Board, Fenchurch Advisory Partners LLP and J.P. Morgan Cazenove have relied upon the Jupiter Board's commercial assessment of the Acquisition. The Jupiter Board considers the Acquisition to be in the best interests of Jupiter and Jupiter Shareholders as a whole.

Andrew Formica, Chief Executive of Jupiter, said:

"This is an exciting acquisition that enhances our position as a leading UK asset manager, provides increased scale and diversification into attractive product areas, and creates stronger future growth prospects for the business. It is also consistent with our strategic priorities, adding strong investment talent with a similar culture and investment philosophy.

"The addition of Merian is compelling for all stakeholders. With this acquisition, our business will benefit from an increased capacity to attract, develop and retain high quality talent, backed by further investment in our platform and technology. In turn, we will be able to offer a wider choice of strongly performing active investment strategies to our clients, while shareholders will benefit from a highly earnings accretive deal delivered through substantial cost synergies."

Mark Gregory, Chief Executive of Merian, said:

"Jupiter is a great strategic and cultural fit with our business. It has a market leading brand with a clear focus on high conviction, active asset management which is entirely consistent with our own. I believe the enlarged business will be more strongly positioned to offer greater choice and investment performance to clients and continue to meet clients' ever-evolving needs."

Chris Parkin, Managing Director of TA Associates, said:

"We look forward to becoming a long-term shareholder and partner with Jupiter once again. This is an exciting new chapter for Merian's talented investment team. Our substantial stake in the combined firm underlines our belief that this transaction will deliver significant strategic benefits and returns to shareholders."


4. Jupiter trading update

Jupiter also today releases a trading update with respect to its draft unaudited results for the financial year ended 31 December 2019:

  • Underlying Profit Before Tax[11]of approximately £163 million (FY18: £183 million)
    • Statutory Profit Before Tax of approximately £151 million (FY18: £179 million)
  • Net management fees of approximately £370 million (FY18: £396 million)
  • AUM of £42.8 billion as at 31 December 2019 (31 December 2018: £42.7 billion)
    • £37.6 billion mutual funds (31 December 2018: £36.9 billion)
    • £4.8 billion segregated mandates (31 December 2018: £4.6 billion)
    • £0.4 billion investment trusts (31 December 2018: £1.2 billion)
  • FY19 net outflows of £4.5 billion include:
    • £2.0 billion net inflows into Jupiter's Fixed Income strategy
    • £4.3 billion net outflows from Jupiter's European Growth strategy, principally within the UK and Continental Europe
    • £1.0 billion net outflows from Jupiter's Developed Market Equities strategies
  • The Jupiter Board's ordinary dividend policy remains unchanged[12]. No special dividend will be declared for the financial year ended 2019 as Jupiter balances investment for long-term growth with distribution to Jupiter Shareholders. The Jupiter Board's priority continues to be to maintain its capital strength, including a robust surplus over regulatory capital requirements and it remains committed to returning surplus regulatory capital in excess of needs to Jupiter Shareholders, aligned to its capital allocation framework.


Information on Jupiter

Jupiter is an independent, high conviction, active asset management business, managing mutual funds, segregated mandates and investment trusts on behalf of individuals and institutions across the UK and internationally. Jupiter's primary purpose is to help clients achieve their long-term investment objectives through delivering superior returns after all fees on client assets. Asset classes covered by Jupiter's funds include equities, fixed income, multi-asset, multi-manager and alternatives (including absolute return funds).

Jupiter is a market leading fund manager in the UK mutual fund market based on the size of its AUM and gross sales, its strong investment performance track record, the strength of its brand and presence in key distribution channels. As at 31 December 2019, approximately 88 per cent. of Jupiter's AUM was in mutual funds, the majority of which are open-ended funds directed towards investors through intermediated distribution channels in the UK, EMEA, Asia and Latin America. In addition, Jupiter provides investment management services to institutional clients and investment trusts. Jupiter has offices in London, Hong Kong, Singapore, Austria, Germany, Italy, Luxembourg, Spain, Sweden and Switzerland.

As at 31 December 2019, Jupiter had approximately £42.8 billion of AUM.

Information on Merian

Merian is an independent, global asset management firm which utilises an active high-conviction investment strategy. Merian distributes its products to wholesale, retail and institutional investors in the UK, EMEA, the Americas and Asia. Merian provides world-class investment expertise across virtually all major asset classes, in addition to highly-regarded capabilities in a number of specialist areas, offering a broad range of fundamental and systematic active fund strategies, with the largest strategies being global equities and UK equities. In addition, Merian has strong capabilities in fixed income, European equities, global emerging market equities, alternatives and global asset allocation.

Merian's purpose and objective is to help its clients meet their long-term financial objectives and aspirations by investing their assets in a responsible way and delivering sustainable value to them. In order to meet the high expectations of its clients and their advisers, Merian focuses on identifying and maintaining intelligent and repeatable ways in which to generate positive investment outcomes, and it approaches this work in a way that enables it to have a positive impact on its clients, employees and society through the implementation of its "responsible business principles".

As at 31 December 2019, Merian had AUM of £22.4 billion.


Completion is subject to the satisfaction (or, where permitted, waiver) of certain conditions, including relevant regulatory approvals and the approval of the Acquisition by Jupiter Shareholders at the General Meeting. The Jupiter Board will enter into irrevocable undertakings to vote in favour of the resolutions to approve the Acquisition at the General Meeting. The Circular (including the notice convening the General Meeting), the Prospectus and the Debt Prospectus in respect of the issuance of Tier 2 debt will be published and, where applicable, sent to Jupiter Shareholders in due course. The timing of certain of the conditions to Completion is uncertain given the involvement of third parties, including relevant regulators, but it is currently expected that Completion will occur in the second half of 2020, with the earliest expected completion date being 1 July 2020.

Presentation to analysts and investors

A presentation for analysts and investors will be held this morning at 09:30am at the Zig Zag Building, 70 Victoria Street, London SW1E 6SQ.

The presentation will also be accessible via a live audiocast available at https://secure.emincote.com/client/jupiter/jfm016


Jupiter Fund Management plc (+44 (0) 20 3817 1000)
Andrew Formica, Chief Executive
Wayne Mepham, Chief Financial Officer
Alex Sargent (Investor Relations) (+44 (0) 20 3817 1534)
Despina Constantinides (Media Relations) (+44 (0) 20 3817 1278)

Fenchurch Advisory Partners LLP (+44 (0) 20 7382 2222)
(Lead Financial Advisor)
Vincent Bounie
Malik Karim
Philip Evans

J. P. Morgan Cazenove (+44 (0) 20 7742 4000)
(Joint Financial Advisor and Joint Corporate Broker)
Edward Squire
Andrew Stockdale

Numis (+44 (0) 20 7260 1000)
(Joint Corporate Broker)
Charles Farquhar
Stephen Westgate

Powerscourt +(44 (0) 20 7250 1446)
(Financial Communications Advisor to Jupiter)
Justin Griffiths
Victoria Heslop


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