Magellan profits spike as firm invests in $22bn fund manager

Magellan Financial Group has reported an increase of 31 per cent in its statutory net profit after tax (NPAT) in FY24.

Statutory NPAT was $238 million, up from $182 million in FY23. 

Funds under management were $36.6 billion comprising $17.1 billion in retail assets and $19.4 billion in institutional ones. The firm said that outflows have slowed quarter-on-quarter. Particular gains were seen in its Airlie and infrastructure strategies, it said. 

Andrew Formica, executive chairman, said: “These results indicate a positive shift following a challenging few years for the business. While there is still work to be done, our financial strength, strong profitability and operating cash flows have allowed us to continue to pay attractive dividends to shareholders and also invest for the future.”

He noted the firm has “resolved a number of legacy issues” during the financial year, including around the employee share purchase plans and the conversion of the closed class units of the Magellan Global Fund.

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Looking ahead, he said the firm has identified the US as a “key growth market” for the asset manager, given its size and scale. 

“While this will take some time to bear fruit, we are excited about the opportunities in this market, our ambitions are high, and we are committed to investing in a disciplined and value-accretive manner.”

Deputy chairman and non-executive director, Hamish McLennan, has indicated he will be stepping down from the board after eight years. He joined the board in 2016 and was appointed chairman in February 2022 after the exit of Hamish Douglass, and transitioned to the role of deputy chairman in August 2023.

Acquisition

Magellan also announced that it has acquired 29.5 per cent of the parent company of Vinva Investment Management, Vinva Holdings, for $138.5 million. 

Vinva manages active systematic equity strategies across Australian and global equity markets and has $22 billion in funds under management, having been founded in 2010.

This will see it distribute Vinva’s products and investment strategies through its global distribution team as part of an exclusive distribution agreement, excluding to Australian institutional clients. The two firms also intend to collaborate on new product initiatives in Australia and globally.

Its managing director and chief investment officer, Morry Waked, was formerly the global chief investment officer at Barclays Global Investors (BGI), and the majority of Vinva’s investment team also worked at BGI previously. 

Formica said: “We are delighted to partner with Vinva, in what we see as the coming together of two culturally aligned businesses focused on delivering for clients. 

“The Vinva team are experts in insight-driven systematic equity investing with significant intellectual property in their business, developed over decades of investing in global equity markets. We have long admired and respected the business and are pleased to extend our strategic partnership through being both a supportive minority shareholder and distribution partner.”

Formica will also join the board of Vinva as a non-executive director.

Waked said: “We are pleased to welcome Magellan as a strategic partner. The entire Vinva team is proud of the business we have built over the last 14 years, and today’s announcement marks the next step in our journey. Partnering with Magellan allows us to leverage their extensive distribution network to accelerate our strong growth prospects, while ensuring we remain focused on our passion of delivering consistent outperformance to our clients.”