(Alliance News) - Polar Capital Holdings PLC on Thursday said it has agreed to acquire the International Value & World Value equity team from First Pacific Advisors LP.
First Pacific is based in Los Angeles and its International Value & World Value equity team is led by Pierre Py and Greg Herr, both of whom will join London-based Polar Capital.
In exchange for the International Value & World Value equity team, Polar Capital will pay First Pacific Advisors - from its 55% standard interest - "a 25% share of the business's revenues" over the next five years.
As at December 31, Py and Herr managed around USD1 billion of assets across "three pooled vehicles and three institutional segregated accounts".
According to Polar Capital: "The FPA Paramount Fund Inc and FPA International Value Fund have delivered top quartile performance in their respective Morningstar mutual fund categories over three years, and each has a four-star Morningstar rating."
Based on the existing USD1 billion AUM figure, Polar Capital's core earnings per share share will benefit by around 0.5 pence, but during the revenue share period this benefit "will be depressed".
"As strategy revenues grow EPS will benefit, with the end of the initial five year revenue trail delivering a further gear change of EPS improvement," said Polar Capital.
The deal is set to complete in the third or fourth quarter of 2020, following which Py, Herr and the equity team will transfer to Polar Capital and their funds will be reorganised into a new series trust.
Polar Capital Chief Executive Gavin Rochussen said: "This is a very exciting development for Polar Capital that begins to deliver our strategy to develop an international and global product, an institutional presence and to establish a Polar Capital North American bridgehead to complement our existing east coast presence.
He added: "Pierre, Greg and their colleagues are precisely the type of team that we have been looking to recruit; a global and international equity team, deploying a fundamental value style of investing with an excellent track record, with existing institutional support and significant growth potential."
Shares in Polar Capital were down 0.7% at 546.00 pence in London on Thursday morning.
By Anna Farley; annafarley@alliancenews.com
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Polar Capital (POLR)