Philadelphia, 19 August 2009
Macquarie Group (Macquarie) (ASX: MQG) today announced that it has entered into an agreement to acquire Delaware Investments (Delaware), a leading US-based diversified asset management firm, from Lincoln Financial Group (Lincoln Financial) (NYSE: LNC) for $US428 ($A516) million, subject to certain closing adjustments.
Upon completion of the transaction, the combined assets under management (AUM) of Macquarie and Delaware are expected to be over $US300 ($A361) billion.
The acquisition is consistent with Macquarie's strategy to develop a global asset management capability through building a highly regarded team of investment professionals, offering an attractive suite of investment products and gaining broader access to the world's largest capital market.
Delaware is a well-respected, US-based diversified asset management firm with over $US125 ($A150) billion in AUM (as of June 30, 2009). Delaware provides investment services to retail and institutional investors through a broad range of managed accounts, separate accounts, mutual funds, retirement accounts, sub-advised funds, and other investment products. Founded in 1929, Delaware is one of the oldest asset management firms in the United States. Headquartered in Philadelphia and with additional investment teams in San Francisco and Boston, Delaware employs approximately 580 people.
Delaware will remain headquartered in Philadelphia with its team of investment management professionals continuing to serve their clients under the same investment processes. Delaware clients will be offered opportunities to invest in new products with access to Macquarie's investment strategies, notably in real assets, global fixed income and alternatives. Macquarie clients across its global network will be offered investment solutions involving Delaware's investment strategies, in structures designed specifically for them. Macquarie will also provide additional funding to support Delaware's growth through continued investment in operations, distribution and commitment to expanding its multi-boutique approach.
Shemara Wikramanayake, Global Head of Macquarie Funds Group, said: “Macquarie has a long and successful history in asset management. Since 1980 our asset management activities have grown both organically and through the addition of specialist asset management teams. From that strong base and given current opportunities in the market, we feel now is an ideal time to expand our reach and offering as an asset manager."
“We have a high regard for the Delaware team and are delighted to have them join us. Delaware will form a key element of Macquarie Funds Group's offering to our clients globally and will significantly enhance our existing North American asset management activities," said Ms Wikramanayake.
Ms Wikramanayake said that given the distinct nature of Delaware and Macquarie's asset management businesses, it will be business as usual for Macquarie's existing clients.
"The acquisition of Delaware is a demonstration to our clients of the ongoing commitment we have to developing a global asset management capability with significant scale, product depth, research and investment capacity," added Ms Wikramanayake.
Macquarie Funds Group (MFG), the asset management arm of Macquarie Group, is a full service global fund manager with over 25 years experience and offers a range of investments for both retail and institutional investors across a variety of asset classes including fixed income, cash, currencies, equities, commodities, emerging markets, listed infrastructure and listed real estate as well as private equity and hedge fund of funds. MFG employs over 600 staff across 19 locations globally with AUM of approximately $US67 ($A80) billion* as of July 31, 2009.
Delaware President, Patrick Coyne, and his management team will continue to run Delaware. Mr Coyne will report to Ben Bruck, an Executive Director of Macquarie Funds Group and head of Macquarie's Affiliated Managers Division, who will relocate to Philadelphia.
Patrick Coyne, President of Delaware Investments, said: "We are very excited about the opportunities this transaction presents. Like Delaware, Macquarie is firmly committed to both the institutional and retail asset management business."
Mr Coyne said that importantly, Delaware clients will see consistency and continuity in the way their investments are managed.
"Macquarie is the perfect partner for us. They are strong supporters of Delaware's investment teams and their processes, our management team and our multi-boutique structure. Macquarie's desire to invest in and grow our product and distribution capabilities will be well received by our clients and our people."
Ben Bruck, Executive Director, Macquarie Funds Group, said: "Delaware's US-based expertise substantially complements Macquarie's global asset management activities. Macquarie plans to offer its clients Delaware's investment strategies through its global network. We will also explore opportunities to offer Macquarie’s global strategies and products to US clients through Delaware, most notably in real assets, global fixed income and alternatives."
Mr Bruck said that one of the key things that attracts Macquarie to Delaware is its record of attracting, supporting and developing new teams and capabilities.
"Delaware's approach is closely aligned with Macquarie's - one that is committed to growing assets under management by supporting best-in-class investment professionals and adding new investment teams to deliver superior results for investors. We have also been particularly impressed with Delaware’s long-standing record of fiduciary excellence and true-to-label commitment to its clients," added Mr Bruck.
As part of the transaction, Delaware will continue managing Lincoln Financial general account insurance assets under a long-term contract on financial terms similar to current arrangements as well as provide additional sub-advisory services.
Macquarie expects to pay Lincoln Financial approximately $US428 ($A516) million in cash to acquire the business and assets of Delaware, subject to a purchase price adjustment at closing based on any change in net assets.
The transaction will be funded by Macquarie Bank Limited (MBL). MBL's Tier 1 capital ratio is anticipated to decrease by approximately 1.2% as a result of the transaction. The transaction is expected to close around the end of 2009 and is subject to regulatory approvals and other customary closing conditions.
Macquarie Capital (USA) Inc. served as financial advisor and Weil, Gotshal & Manges LLP provided legal counsel to Macquarie Group in relation to the transaction.