Acquisitions, when done right, can change the fortunes of a company.

In 2008, BlackRock's assets under management were less than ~$1.5trn.

December 2009, BlackRock bought 100% of Barclays Global Investors in a cash-and-share deal worth $15bn.

BlackRock's AUM are now $9.49trn ImageImageImage
Barclays Global Investors (BGI) was one of the world’s largest asset managers and a leading global provider of investment management products and services at the time.

BlackRock acquired BGI including its market-leading exchange traded fund platform iShares. Image
BlackRock's acquisition of Barclays Global Investors made it become a diversified and fully integrated asset management firm with $3.2 trillion worth of assets under management in December 2009.
How did BlackRock settle the $15bn cash-and-share transaction?

BlackRock issued 37,566,771 shares of common stock, convertible stock to a wholly-owned subsidiary of Barclays Bank and paid ~$6.65 billion in cash to Barclays Bank.

Barclays also got two seats on BlackRock's board
The shares issued gave Barclays a 19.9% stake in BlackRock.

BlackRock then became one of the biggest shareholders in Barclays, with a 7.1% stake.

The couple was in honeymoon.
Asset management services include the creation, establishment and marketing of retail pooled funds (mutual funds, unit trusts, investment trusts and open-ended investment companies) and the provision of portfolio management services to investors.
After the 2008 global financial crisis, Basel Committee on Banking Supervision developed Basel III, which is an internationally agreed set of measures developed in response to the financial crisis which aim to strengthen the regulation, supervision and risk management of banks. ImageImage
The introduction of the Basel III regulations which meant banks have to hold more capital against minority stakes in asset managers and other firms made it "uncomfortable" for banks to own such stake. Image
Due to the change in regulations (see above tweet), Barclays then sold its 19.9% stake for $6.1 billion in 2012.

Barclays' shares were sold way of an offering and a related buyback by BlackRock of up to $1 billion of the stock.

The marriage last for 3 years. Image
BlackRock has certainly cemented its position as one of the largest asset managers in the world.

BlackRock's assets under management have ⬆️ to $9.49-trillion in quarter 2 of 2021, up from $7.32trn in Q2 of 2020.

In 2009, BlackRock's assets under management were just $2.1trn. ImageImage
The last year and half has seen the sale of asset management units in efforts to "streamline (by sellers) or boost (by buyers)" their portfolios.

Bidvest Financial Services is selling its entire 100% shareholding in Cannon Asset Managers to Seriti Capital Partners.
Seriti Capital Partners was founded in 2021 by two of Cannon Asset Managers former employees being, Tshepo Modiba and Deshan Naidoo.

Bidvest Financial Services acquired Cannon in 2018 from Citadel Wealth Management with the idea of adding to its banking and insurance operations. Image
Goldman Sachs’ asset management unit has agreed to buy NN Investment Partners for ~€1.6bn.

NN Investment Partners has ~€298bn of assets under management

Goldman Sachs Asset Management has ~$2.3tn in assets under supervision. ImageImage
Morgan Stanley bought Eaton Vance Corp. in a stock and cash transaction.

Eaton Vance had $500bn in assets under management.

With the addition of Eaton Vance, Morgan Stanley will oversee $5.4trn of client assets across its Wealth Management and Investment Management segments.
Eaton Vance common stockholders were offered 0.5833 Morgan Stanley common shares and $28.25 per share in cash for each Eaton Vance common share, and had the opportunity to elect to receive the merger consideration all in cash or all in stock.
Wells Fargo agreed to sell its asset management arm to US private equity firms, GTCR and Reverence Capital for $2.1bn.

Wells Fargo Asset Management has ~$603bn in assets under management.
Bank of Montreal has agreed to sell its EMEA asset management business to Ameriprise Financial Inc for $870 million in an all-cash transaction.
In 2020, Sanlam signed agreements with African Rainbow Capital Financial Services (ARC FS) in respect of a transaction to establish one of the largest black-empowered asset management companies in South Africa.

As at 30 Jun 2021, the total assets managed by black owned firms in South Africa increased to R1.15trn, which is an increase from R667.8bn in 2020.

This was aided by the above deal between Sanlam and African Rainbow Capital Financial Services. ImageImageImage
The world's 10 largest asset managers assets under management sit at +/-$40 trillion.

BlackRock leads the pack with ~$9.49trn worth of assets under management. ImageImage

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More from @MaanoMadima

13 Oct
Popularity of sale and leaseback transactions.

Equities Properties and the Eskom Pension & Provident Fund have agreed to form a joint venture that will buy the DSV Campus from DSV Real Estate for R2 050 000 000 and lease it back to DSV for an initial annual rent of R157 515 084. ImageImageImage
What is a sale and leaseback?

It is a transaction where one entity (the seller-lessee) transfers an asset to another party (the buyer-lessor) and leases back that same asset.

This is becoming a popular way for entities to secure long-term financing from its assets. Image
Accounting treatment varies on whether transfer qualifies as a sale.

If transfer of asset is not a sale (no control), it is considered to be a financing transaction.

Legally, sale has occurred, economically, asset remains with the seller and no P/L on sale should be recognised.
Read 21 tweets
12 Oct
Ownership of "big" cement companies in SA.

1) PPC Cement:
For year ended 31 Mar 2020, the PIC, representing Government Employees Pension Fund held a 20.88% stake in PPC which it later sold in 2020.

Today, PPC announced that the PIC bought 5.370%.
Image
In May 2020, the PIC reduced its stake in PPC Cement from 24.506% to 19.92%.

July 2020, the PIC sold 6% to reduce its stake from 19.92% to 13.98%.

Sep 2020, PIC sold 4.42% to reduce its stake in PPC Cement from 13.98% to 9.52%.

Nov 2020, PIC reduced its stake to 4.93%.
Apparently in 2020, PPC Cement had agreed to pay its former finance director, Tryphosa Ramano a monthly ‘consultancy’ fee of R321,499.95 for just 40 hours of work a month. 😬 Image
Read 6 tweets
11 Oct
Convertible loans are great instruments when used right and bad when used wrongly.

A certain lender believes he is entitled to a 34% stake after extending a ~R46k convertible loan (1% equity conversion a day in the event of default).😩

Example of how a convertible loan work.🧵
A convertible loan is a financing method that gives the lender an option to "swap" the debt into equity.

Convertible loans normally carry low interest since the conversion would translate to equity (loan carries less risk for the lender).

There are tax implications to consider.
Purple Group will serve as an example of how convertible loans work.

Purple Group is well know for being the parent of Easy Equities with a 70% stake.

It provides trading and investment solutions through; GT247, EasyEquities, GT Private Broking and Emperor Asset Management.
Read 12 tweets
10 Oct
Mediclinic's growth was fueled by acquisitions and having a backer (Remgro) with deep pockets helps.

Boss move was in 1999 when it expanded operations to establish and acquired 60% stake in emergency assistance services, ER24. 2005, acquired remaining 40%
Another crazy, yet great transaction (Mediclinic acquisition) was in 2015.

Remgro acquired a 29% stake of Spire Healthcare shares from Cinven, a European private equity firm, for total purchase consideration of £431.7million.

That wasn't the end of the transaction.
Mediclinic then in turn acquired the Spire holding (29%) from Remgro for R8.6bn being the aggregate of purchase price, transaction & funding costs.

How did Mediclinic fund the R8.6bn?

It did a fully underwritten, renounceable rights issue to qualifying Mediclinic shareholders.
Read 6 tweets
23 Sep
Competition Tribunal has approved Dis-Chem’s acquisition of 100% of the issued share capital in and shareholder claims of Pure Pharmacy Holdings Ltd, trading as Medicare Health (50 pharmacies) from existing shareholders.

Dis-Chem will pay a final purchase consideration of R250m.
Many of the stores in the Medicare portfolio are in convenience centres, in geographies where Dis-Chem is currently under-represented which gives the Group access to new markets.

Year ended 28 Feb 2021, Medicare generated revenue of R1.1 billion, with dispensary contributing 67%
Dis-chem is on an acquisition spree.

Last year, Dis-Chem acquired Baby City in a transaction valued at ~R430 million.

Dis-Chem aims to open clinics to provide antenatal care to pregnant moms in the Baby City stores.

Baby City operates a network of 33 stores across SA.
Read 12 tweets
22 Sep
It is raining BEE schemes.

Ellies Holdings has concluded a
B-BBEE agreement with Imvula Education Empowerment Fund Trust valued at R18,5m.

Imvula subscribed to ~185m ordinary shares in Ellies at 10 cents per share, resulting in a BEE shareholding in Ellies Holdings of 23%
Imvula agreed to transaction terms that are favourable to Ellies
such as:

a 10-year lock-in period

Imvula funding the R18.5m from its own sources with no funding (vendor financing) assistance being required from Ellies.

More on vendor financing👇🏾

This changes the shareholding of Ellies Holdings significantly.

Imvula is the biggest shareholder with a 23% sharing.

Mazi Capital shareholding drops to 15,58% from 20.5%

Standard Financial Markets with 5,94% holding.

Standard Bank is the biggest lender to Ellies Holdings.
Read 4 tweets

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