A $122B Multinational Asset Manager Buys a Fast-Growing U.S. ETF Shop
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Wednesday, February 14, 2018

A $122B Multinational Asset Manager Buys a Fast-Growing U.S. ETF Shop

A multinational asset manager with $122 billion in AUM is buying a fast-growing ETF shop in the U.S., less than two years after buying another stateside ETF shop.

Seoul-based Mirae Asset Global Investments Co., Ltd. [profile] has agreed to buy 100 percent of New York City-based Global X Management Company LLC [profile], Global X's chiefs and Mirae Asset's Taeyong Lee confirmed yesterday afternoon. The two companies are pitching the deal as "adding an anchor presence in the United States" for Mirae's global ETF business, which has about $20 billion in AUM (not including Global X). Global specializes in "thematic growth, income and international" ETFs.

CityWire, the Financial Times, and the Wall Street Journal all reported on the Mirae-Global X deal.

Pricing and terms of the deal, which is expected to close in Q3 2018, were not disclosed. RBC Capital Markets advised Global X on the deal, while Baker & McKenzie and Shearman & Sterling offered legal counsel. Dechert and Shin & Kim, provided legal counsel to Mirae Asset, which is the asset management arm of Korean financial services giant Mirae Asset Financial Group (which is also in brokerage, insurance, and investment banking).

Along with the deal, leadership at Global X will be shifting internally. Co-founder Bruno del Ama, currently chairman and CEO, will pass the CEO reigns to Luis Berruga, currently president and chief operating officer. And the official word is that Global X's day-to-day operations and brand will remain unchanged.

Mirae Asset's existing ETF businesses include BetaShares in Australia, Horizons in Canada, and Tiger ETF in Asia. Mirae Asset has also been in the U.S. ETF business for a few years. In 2012 Mirae's Horizons teamed up with Exchange Traded Concepts to launch ETFs in the U.S. (with Horizons subadvising). Then a year ago Horizon ETFs Management USA bought Stamford, Connecticut-based Recon Capital Advisors. As of December 2016 Horizons and Recon had about $150 million in combined ETF AUM in the U.S., so the Global X deal dramatically increases Mirae Asset's ETF business in the U.S.

Global X's sale to Mirae Asset comes 10 years after Global X's founding and about two years after J.P. Morgan bought a passive, minority stake in the ETF shop. The pricing and terms for that deal, and the size of J.P. Morgan's stake, were not disclosed. A spokesman for Global X confirms that J.P. Morgan stake will be divested as part of the deal.

The deal also comes after many months of strong flows for Global X, which brought in a whopping $4.323 billion in estimated net inflows last year. Global X has been consistently at or near the top of the net inflows pack among midsize fund firms (with between $1 billion and $10 billion in AUM).

Del Ama praises Mirae Asset for its "entrepreneurial and client-centric culture." Jose Gonzalez, co-founder and chief innovation officer of Global X, points favorably to both Mirae Asset's "client- and employee-centric culture" and its "global expertise and distribution power."

Taeyong Lee, global head of ETFs for Mirae Asset, describes the deal as "a landmark event" for the multinational asset manager.

"With Global X on board, we are now connecting one of the most successful US ETF firms to a prominent Asian-based global ETF manager, creating a powerful ETF platform," Lee states.

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