Australian Ethical Investment Limited (ASX: AEF) has announced it has entered into a binding agreement to acquire the sustainable fixed income asset management business, Altius Asset Management from Australian Unity.
The acquisition, when completed, will see Australian Ethical grow its funds under management (FUM) by circa A$2 billion, from $10.3 billion to circa $12.3 billion an increase of 19%.
The combined Australian Ethical and Altius fixed income capability will result in a sustainable fixed income team of seven, an expanded bond fund portfolio, and Australian Unity becoming one of Australian Ethical’s largest institutional clients.
The proposed acquisition is consistent with Australian Ethical’s strategy to serve the growing potential addressable market created by the structural drivers favouring responsible investing, and to offer super fund members and investors increased access to ethical investment capability.
Australian Ethical will pay Australian Unity $4.25 million in cash upon transaction completion, which will be subject to the satisfaction of Conditions Precedent (expected to occur in July), with an additional $1.25 million payable after completion, contingent on Australian Unity investment meeting certain transition steps and maintaining agreed minimum FUM targets. While at a lower revenue margin consistent with the fixed income asset class, this transaction will be EPS accretive from financial close and is expected to generate circa $1million of EBITDA in FY25.
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Australian Ethical Chief Executive Officer John McMurdo: “The acquisition of leading fixed-income fund manager Altius is another important milestone for Australian Ethical as we scale and broaden our investment capability consistent with our strategy and Ethical Charter. Transactions such as this add to our momentum as a purpose driven business and our ability to deliver sound investment returns while influencing progress towards a better future for people, animals, and planet.
“We are delighted to welcome the Altius team, their clients, and Australian Unity as a key institutional client partner. They join 130,000 investors and superannuation customers who have also chosen to invest ethically.”
Altius’s Co-founder and Chief Investment Officer Bill Bovingdon: “We are excited by the opportunity to join Australian Ethical, the market-leading ethical investment platform, and to combine Altius’ deep expertise in responsible fixed income with Australian Ethical’s ethical investing heritage across asset classes.
“Naturally, clients will be at the centre of our considerations as we work closely with Australian Unity on a successful transfer of funds.”
Australian Ethical’s half year FY24 results and reaching a milestone $10 billion in FUM in March 2024, demonstrate that investment in the business is achieving growth and scale, supported by its strengthening business platform.
