UK/US - Principal Global Investors has acquired a majority stake in London-based emerging markets specialist Finisterre Capital.
US-based Principal said the transaction would enhance its emerging market investment capabilities and provide an opportunity to develop a wider platform through the launch of complementary new emerging market products and strategies and further strengthen its well-established multi-boutique model.
The transaction is expected to close early in Q3, pending regulatory approval. It is part of the Principal Financial Group's 2011 capital deployment strategy of spending approximately $700m on executing attractive M&A opportunities and a share repurchase programme. Excluding transaction and integration costs, Principal estimates the acquisition will be EPS neutral in 2011 and accretive in 2012.
Finisterre Capital was founded in 2002 and has $1.63bn in assets under management across its Global Opportunity, Sovereign Debt and Credit funds. The five partners, Frode Foss-Skiftesvik, Paul Crean, Rafaël Biosse Duplan, Xavier Corin-Mick and Yan Swiderski, will retain a significant minority stake in the business and have agreed to put a significant share of their consideration into funds managed by the firm. They will continue to direct the day-to-day operations and will retain authority over fund investment decisions.
"Finisterre Capital is a top class emerging markets fixed income specialist with a strong investment performance track record," said Jim McCaughan, chief executive officer of Principal Global Investors.
"We are excited about the opportunity to help the business develop further and expand our capabilities in this growing market segment. There is already an enormous appetite to invest in emerging economies and we firmly believe the demand will continue as these markets develop."
Finisterre Capital chief investment officer Paul Crean added: "The strategic partnership with Principal offers us the very attractive combination of continued autonomy and long-term stability for our clients. It will enable us to expand our capabilities while preserving our business focus, organisational structure and unique investment culture."
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