Jim McCaughan Opalesque Industry Update - Acquisition expands its emerging market investment capabilities
Principal Global Investors, LLC, a leading global asset manager and a member of the Principal Financial Group (R), today announced a definitive agreement to acquire a majority stake in Finisterre Capital, LLP, and Finisterre Holdings Limited, (together Finisterre Capital), an established emerging markets investor based in London.
“Finisterre Capital is a top-class emerging markets fixed income specialist with a strong investment performance track record,” said Jim McCaughan, chief executive officer of Principal Global Investors. “We are excited about the opportunity to help the business develop further and expand our capabilities in this growing market segment. There is already an enormous appetite to invest in emerging economies and we firmly believe the demand will continue as these markets develop.”
Founded in 2002, Finisterre Capital has approximately $1.63 billion in assets under management primarily across three funds: Global Opportunity Fund, Sovereign Debt Fund and Credit Fund. The five partners (Frode Foss-Skiftesvik, Paul Crean, Rafaël Biosse Duplan, Xavier Corin-Mick and Yan Swiderski) will retain a significant minority stake in the business and have agreed to put a significant share of their consideration into funds managed by the firm. They will continue to direct the day-to-day operations and will retain authority over fund investment decisions.
“The strategic partnership with Principal offers us the very attractive combination of continued autonomy and long-term stability for our clients,” said Paul Crean, chief investment officer at Finisterre Capital. “It will enable us to expand our capabilities while preserving our business focus, organizational structure and unique investment culture.”
Through this transaction, The Principal will enhance its emerging market investment capabilities, with an opportunity to develop a wider platform through the launch of complementary new emerging market products and strategies, and further strengthen its well-established multi-boutique model. Finisterre Capital will benefit from access to The Principal’s global presence and strong distribution network, as well as leveraging Principal’s product development expertise and best-practice support infrastructure.
The transaction is expected to close early in third quarter, pending regulatory approval. It is part of the Principal Financial Group’s 2011 capital deployment strategy of spending approximately $700 million on executing attractive M&A opportunities and a share repurchase program. Excluding transaction and integration costs, The Principal estimates the acquisition will be EPS neutral in 2011 and accretive in 2012.
Sandler O'Neill + Partners advised The Principal on the transaction and Fenchurch Advisory Partners advised Finisterre Capital.
Principal Global Investors is a diversified asset management organization and a member of the Principal Financial Group, with expertise in equities, fixed income and real estate investments, as well as specialized overlay and advisory services. Principal Global Investors manages $232.4 billion in assets primarily for retirement plans and other institutional clients.
Finisterre Capital LLP, founded in 2002, is an emerging markets fixed income specialist dedicated to delivering risk-controlled, total return investment strategies to the institutional marketplace. The firm manages emerging markets funds in a variety of asset classes, including sovereign debt, local currency debt, foreign exchange, corporate credit, special situations and equity.
The Principal Financial Group (R) is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $318.8 billion in assets under management2 and serves some 19.1 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.