In an effort to expand its alternative investment capabilities, Principal Global Investors, LLC, the investment arm of Principal Financial Group Inc. (PFG), agreed to purchase 55% shares of Liongate Capital Management (Liongate) for an undisclosed amount.
Founded in 2003, Liongate Capital Management manages hedge fund portfolios with operations in London and New York. Currently, Liongate supervises $2.1 billion assets under management with customers including leading pension funds, insurance companies and sovereign wealth funds.
The transaction is expected to culminate in the second quarter of 2013 and will be slightly accretive to earnings from the first year itself. Liongate partners will retain 45% stake and deploy a considerable portion from the sale proceeds in investment strategies.
The addition of Liongate to the company’s portfolio will fortify its alternative investment competence as well as help it widen its reach in the multi-asset and hedge fund solutions.
On the other hand, Liongate will gain from Principal Financial’s international exposure, new as well as existing product portfolios and solid distribution networks.
Earlier in 2011, the company acquired the majority stake in Finisterre Capital LLP and Finisterre Holdings Limited, an emerging markets debt investor based in London. Furthermore, Principal Financial is consistently undertaking strategic acquisitions. Recently, it initiated a bid to acquire AFP Cuprum S.A. for $1.39 billion. Chile-based AFP Cuprum is a leading pension manager with about $32.7 billion of assets under management.
Principal Financial currently carries a Zacks Rank #3 (Hold). None of the estimates were revised following its fourth-quarter earnings release. With optimism over the current acquisition, we expect analysts to raise their estimates, putting upward directional pressure on the Zacks Rank.
Other multi-line insurers like CNO Financial Group Inc. (CNO), Assured Guaranty Ltd. (AGO) and AEGON NV (AEG), carry a Zacks Rank #1 (Strong Buy) and are worth noting.
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