of FBR & Co's
] mutual fund business by Hennessy Funds
] could be likened to a smaller fish eating a biger fish.
While executives at neither firm are granting interviews, an FBR press release revealed the price tag on the deal. Hennessy appears to be paying about $28.75 million up front to gain control of $1.9 billion of mutual fund AUM from FBR.
That price works out to 1.51 percent of AUM.
The deal will also triple the size of Neil Hennessy
's mutual fund shop. When it closes in the third quarter, Hennessy will have $2.7 billion of AUM.
FBR executives revealed the pricing when they extended
a $12 million stock buyback through June 13. The bulk of FBR's business is investment banking.
Hennessy, which is publicly traded (albeit infrequently) under the ticker HNNA, has not filed any disclosures related to the deal as of Thursday afternoon.
The Novato, California-based fund firm has 5.76 million shares outstanding (and float of three million), giving it a market cap of $14.34 million based on today's price of $2.49. Trading volume of HNNA is normally low and as of 2:30 pm today only 500 shares of Hennessy had traded. The price up was up six percent.
With Hennessy's market cap at about half of the upfront price for FBR Funds, where is Hennessy getting the money? That has not been disclosed.
It's not clear what the deal means for Russell Parker
, FBR's chief marketing and distribution officer. He joined FBR five years ago after holding top distribution jobs at Janus, Nuveen and a Natixis shop.
Meanwhile, the deal will mark a change of client for David Rainey
, Brian Macauley
and Ira Rothberg
. The trio of analysts will continue to manage FBR's flagship mutual fund, the four-star, $724.7-million FBR Focus Fund
Until September 2009, that mutual fund had been PMed by star PM Chuck Akre
and sub-advised by Akre's eponymous shop. After Akre left
and started his own mutual fund, FBR hired
Akre's analyst team -- Macauley, Rainey and Rothberg -- to PM the Focus Fund in Akre's stead.
Hennessy will collapse FBR Small Cap
, FBR Mid Cap
and FBR Large Cap
into Hennessy Cornerstone Growth
, Hennessy Focus 30
and Hennessy Cornerstone Large Growth
. FBR president and chief investment officer Dave Ellison
and PM Winso Aylesworth
will join Hennessy and continue to PM FBR Gas Utility Index
, FBR Small Cap Financial
, FBR Large Cap Financial
and FBR Technology
. And Hennessy will keep Financial Counselors
and London Company
sub-advising FBR Balanced
and Financial Counselors sub-advising FBR Core Bond
Hennessy also plans to bring on board "members of the FBR distribution, marketing, trading, compliance and trading departments."
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