In line with its strategy to enhance market share and provide best-in class investment ideas to its clients, Affiliated Managers Group Inc. (AMG - Analyst Report) announced two deals. These two announcements facilitated nearly a 5% rise in the company’s shares in an intra day trading on Friday, to reach $190.98. Notably, the financial terms for both the deals were not disclosed.
Of the two transactions, one relates to Affiliated Managers signing an agreement with Aviva Investors North America Holdings, Inc. to acquire full equity interest in River Road Asset Management, LLC. Aviva Investors North America Holdings is a subsidiary of U.K. based insurer Aviva plc (AV). Headquartered in Louisville, KY, River Road has nearly $11 billion in assets under management (AUM) and offers value-oriented equity strategies. The deal is likely to be completed next month.
Additionally, River Road has a business relationship with Aston Asset Management, LP, a part of AMG Funds operation. Following the completion of the deal, River Road will continue to offer sub-advisor services to six mutual funds in the Aston Funds family. Further, River Road’s management will own a significant part of the equity and continue to control the firm’s day-to-day operations.
The second deal pertains to Affiliated Managers acquiring a minority stake in EIG Global Energy Partners, LLC. Based in Washington, EIG is a global alternative investment firm that specializes in private investments in the energy sector, with approximately $16 billion in AUM (as of Dec 31, 2013). The transaction is expected to close by the third quarter of 2014.
EIG has offices in Houston, Hong Kong, London, Rio de Janeiro, Sydney and Seoul. Further, the firm’s client base comprises prominent pension plans, insurance companies, endowments, foundations and sovereign wealth funds from nearly 20 countries.
We believe Affiliated Managers’ decision to further expand bodes well with its long-term growth plan. Presently, the company is targeting investments in alternatives and global strategies, given the strong investors’ preferences for the same. As of Dec 31, 2013, the company had cash and cash equivalents of $469.6 million.
Currently, Affiliated Managers carries a Zacks Rank #3 (Hold). Some better-ranked asset managers include Lazard Ltd. (LAZ - Analyst Report) and Calamos Asset Management Inc. (CLMS - Snapshot Report). Both of these carry a Zacks Rank #1 (Strong Buy).