Is Flanagan About to Make His 2nd Big Buy of 2017?
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Thursday, August 3, 2017

Is Flanagan About to Make His 2nd Big Buy of 2017?

Marty Flanagan's Invesco may be about to make its second acquisition of 2017, again in the ETF business.

Invesco [profile] is in talks to buy a piece of Guggenheim Investments [profile], Guggenheim Partners' asset management business, report Barron's, the Financial Times, Reuters, and the Wall Street Journal. Unnamed sources reportedly say that Invesco is specifically looking at Guggenheim's retail mutual fund and ETF business.

Spokespeople for both Guggenheim and Invesco told the publications that they don't comment on market rumors.

The likely price tag is about $2 billion, unnamed sources tell the WSJ. Guggenheim had about $41 billion in mutual fund and ETF AUM as of the end of June, Morningstar estimates, so the $2 billion price would translate into about 4.9 percent of its AUM. Yet reported AUM estimates for Guggenheim Investments' mutual funds and ETFs vary. The WSJ puts that total at $65 billion, Barron's pegs it at a combined $67 billion, Reuters estimates $30 billion, and the FT describes it as $30 billion in ETF AUM alone. Accordingly, the price-to-AUM ratio varies from 3 to 6.7 percent, depending on which AUM figure you use.

Guggenheim Investments claims more than $237 billion in AUM as of June 30. Its parent, Guggenheim Partners, has more than $290 billion in total AUM and more 2,300 employees across the globe. Invesco had $858.3 billion in AUM at the end of June. Its market cap as of market close yesterday was $14.09 billion (about 1.6 percent of its AUM).

The Invesco-Guggenheim deal rumors come three months after Flanagan unveiled a cash deal to buy a $25-billion-AUM European ETF shop, Source, for an undisclosed sum. That deal was scheduled to close this quarter.

On the Guggenheim side, the deal rumors come as its mutual fund and ETF business is netting strong inflows and as a new president, Jerry Miller, is taking over as president of Guggenheim Investments. And Guggenheim is also fighting rumors, the FT reported last month, of a "power struggle" between Guggenheim Partners founder Mark Walter and global chief investment officer Scott Minerd. Yet Barron's now reports that Minerd is "not expected to join Invesco" as part of the deal in discussions.

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