THE firm that manages the venerable Edinburgh Investment Trust has been acquired by a rival amid the consolidation process in the sector.
Majedie Asset Management has agreed to a takeover offer from Liontrust that may be worth up to £120 million and which could pave the way to big payouts to the directors and employees that own the business.
Liontrust said the deal would allow it to increase assets under management by £5.8 billion to around £42bn and boost the company’s presence in the key institutional market.
Liontrust chief executive John Ions said Majedie’s experienced team operates a robust investment process that is reflected in excellent long-term performance.
He added: “This is demonstrated by the quality of Majedie’s institutional mandates and the fact they were appointed by The Edinburgh Investment Trust in 2020.”
READ MORE: Edinburgh fund management boutique bought by consolidator
Majedie was appointed to replace Invesco as manager of the £1bn Edinburgh Investment Trust following a lengthy period of under-performance.
That was the third change of manager for the trust since 2002, when the board sacked Edinburgh Fund Managers in favour of Fidelity. Six years later it changed to Invesco. The trust was founded in 1889.
It has out-performed its benchmark under Majedie’s management.
Majedie was founded in 2002 by veterans of the Mercury Asset Management business, which was acquired by Merrill lynch in 1997. Chairman James de Uphaugh and chief executive Rob Harris were among the founders.
READ MORE: Boss of Scottish financial giant defends its performance after clinching $1.5bn acquisition
The fund management sector is undergoing a shake-up as firms jockey for position. Some have used acquisitions to help increase their scale or to expand into attractive markets.
In 2017 Liontrust bought Alliance Trust Investments from the Dundee-based Alliance Trust, which out-sourced management of its funds after calls for change from activists investor Elliott Advisors.
Ryan Hughes, head of investment research at investment business AJ Bell, said: "The continued march of consolidation within asset managers shows no sign of abating."
Noting that Liontrust has been "hugely acquisitive" in recent years, he added: "The purchase of Majedie is a surprise as it was not a name regularly touted as a takeover target given its owner managed structure and strong independence but the ability to tap into Liontrust’s wider resource and hopefully grow the assets was clearly a strong pull.
"For Liontrust, gaining a stronger footprint in the institutional market would have been a key attraction given it has historically mainly been a retail brand."
Majedie and Liontrust are based in London.
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