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Premier and Miton to Merge

Combined group to be known as Premier Miton, with £11.5 billion of assets under management

Holly Black 4 September, 2019 | 9:51AM

Shaking hands

Fund groups Premier Asset Management and Miton are to merge, creating a combined business with £11.5 billion of assets under management.

The combined group – to be named Premier Miton - will continue to trade on the Alternative Investment Market (Aim), and Miton shareholders will own 33% of the combined entity.

The firm said the merger would create a business with a wider product range and greater scale, well-positioned for future growth. Mike O’Shea, chief executive of Premier, will be chief executive of the combined group while Miton chief operating officer Piers Harrison, will be chief financial officer of the newly merged business. The merger is expected to take effect in the fourth quarter of 2019.

O’Shea said: “This merger will bring together two complementary and culturally-aligned businesses. Ultimately, this should position us well for continued growth and deliver value for clients, shareholders and employees.”

David Barron, chief executive at Miton, added: “Miton’s expertise in actively managed, differentiated high conviction funds is a very strong complement to Premier’s leading position in multi-asset strategies.”

Miton’s largest fund is the £1 billion Miton UK Multi-Cap Income fund, run by Gervais Williams. While the fund invests in a mix of UK firms, Williams is known for his bias towards smaller companies and top holdings include FTSE 250-listed promotional merchandise company 4imprint and litigation finance firm Manolete Partners. It has returned 30.3% over five years.

Morningstar analyst Rajesh Yadav said: “On the face of it, the merger is complementary as both groups have limited overlap in their product offerings and distribution focus.” While there are around £7 million of annual cost savings expected from the move, he says the extent of the harmonisation will only become clear once final approvals have been secured.

Yadav added: “We will re-evaluate our rating on the proposed entity and its rated strategies when we have further clarity. In the meantime, we retain the existing Morningstar Parent Rating of Neutral for both groups.”

Fund of Funds

Premier’s largest fund is the £1.5 billion Premier Multi-Asset Distribution fund, which has a Bronze Morningstar analyst rating. It is a fund of funds, accessing equities and bonds across the globe by investing in other funds including Franklin UK Equity Income, TwentyFour Dynamic Bond and Legg Mason Rare Global Infrastructure. It has returned 31.9% over five years and yields 4.1%.

Both Premier and Miton are both listed companies. Under the terms of the merger Miton’s shares are valued at 56.74p, which includes a special dividend of 4.9p a share, and Premier’s at 171.75p. Miton’s shares leapt 24% to 51p as the merger was announced.

Darius McDermott, managing director at Chelsea Financial Services, said the merger seemed to be a positive moved as the two groups had complementary fund ranges – with Premier having a strong multi-asset range and Miton an established suite of equity funds, most notably those focused on Europe, the US and small-caps.

McDermott added: “[Mergers are] a sign of the times and the increasing challenges that asset management businesses, especially boutiques, face. The implementation of Mifid II, competition and markets implementations, all take time resources and money. So, both companies will likely be hoping for some scale advantages and cost savings.”

This is the latest merger between fund groups to be announced. In July, Liontrust revealed it was to acquire Robin Geffen’s boutique fund house Neptune Investment Management.

 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Franklin UK Equity Income W Acc2.15 GBP-1.00
Legg Mason IF RARE Gbl Infras Inc A Acc1.33 GBP0.08
LF Miton UK Multi Cap Inc A Acc Retl243.53 GBP-0.25
MI TwentyFour AM Dynamic Bond A Acc16.38 GBP0.06
Premier Multi-Asset Distribution C Acc354.77 GBP-0.06

About Author

Holly Black  is Senior Editor, Morningstar.co.uk

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