Great first result from Janus Henderson post-merger

John Murray

The first result of Janus Henderson Group following the recent merger was a great result with almost all key indicators moving in the right direction.

The highly complementary businesses of Janus Capital Group and Henderson Global Investors merged at the end of May. The Henderson share price had been sold down substantially since the merger was announced due to a range of concerns, including whether synergies would be achieved and potential client losses during the merger process.

This provided Perennial Value with an opportunity to increase exposure to the company at an attractive valuation. A number of the market concerns were allayed by the result. Importantly, the $110million synergy target was reaffirmed and timing of synergy realisation brought forward. Net fund flows were better than expected and the key leading indicator of investment performance has improved across the group. This resulted in higher than expected performance fees. Management fees were also better than expected due to both higher than expected funds under management and a higher fee rate due to the favourable mix of flows.

In our view, the valuation of the company remains undemanding even after the strong price rise on the day after the result. We see the merger as a rare case where the merging businesses are truly complementary.

We expect that over time the stronger Janus Henderson Group will shine through – in terms of not just the cost synergies but also in stronger distribution of the products of the respective former businesses.

For instance, Henderson is strong geographically in Europe and the UK while Janus is strong in the US and Japan. Henderson is strong in Equities and Alternative asset classes, while Janus is strong in Fixed Interest and Quantitative Investing. The stronger global distribution teams across the globe will now be able to sell all of the products of the group in their respective markets.

If these benefits are confirmed, there is both earnings and earnings multiple upside for Janus Henderson.

Issued by: The Investment Manager, Perennial Value Management Limited, ABN 22 090 879 904, AFSL: 247293. Responsible Entity: Perennial Investment Management Limited ABN 13 108 747 637, AFSL: 275101.This website is provided for information purposes only. Accordingly, reliance should not be placed on this information as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation. While every effort has been made to ensure the information in this website is accurate; its accuracy, reliability or completeness is not guaranteed. Past performance is not a reliable indicator of future performance. Gross performance does not include any applicable management fees or expenses. Net performance is based on redemption price for the period and assumes that all distributions are reinvested. Fees indicated reflect the maximum applicable. Contractual arrangements, including any applicable management fee, may be negotiated with certain large investors. Investments in the Trusts must be accompanied by an application form. The current relevant product disclosure statements, Additional Information Booklet and application forms can be found on this website. Use of the information on this website is governed by Australian law and is subject to the terms of use.


John Murray

John Murray established Perennial Value in January 2000 and has 30 years industry experience. He is one of Australia’s most respected value investors and has built a stable team of investment professionals delivering consistently strong returns.

Expertise

ASX:JHG August 2017 Reporting Season Janus Henderson Group

Comments

Please sign in to comment on this wire.