On the go: Federated Hermes agreed on Thursday to obtain the remaining 29.5 per cent interest in Hermes Fund Managers Limited held by the BT Pension Scheme.
In 2018, Federated Hermes acquired a 60 per cent majority interest in HFML from BTPS.
The transaction provided a call option for Federated Hermes to purchase the rest of HFML and gave BTPS a put option to sell its residual shareholding in HFML, in both cases between three to six years after the original agreement.
Both parties have now agreed to close a transaction for BTPS’s remaining 29.5 per cent interest in HFML on August 31 2021.
Federated Hermes will pay £116.5m to BTPS for its remaining shares in HFML after both parties agreed to an independent fair valuation that put the value of the investment management company at £394.9m.
Federated Hermes will fund the transaction through a combination of cash and borrowings from its existing credit line.
An employee benefit trust continues to hold approximately 10 per cent of HFML for the benefit of certain members of its management and key employees.
Christopher Donahue, president and chief executive of Federated Hermes, said: “Over the past three years, our shared values and mutually beneficial areas of expertise have allowed us to engage with BTPS and enjoy an open dialogue with them as a key client and owner.
“Our combined investment management, stewardship and distribution experience make it prudent for FHI to complete this deal in a timely fashion so that we can continue to focus on expanding our investment and stewardship capabilities while growing our global distribution footprint.”
Morten Nilsson, BTPS chief executive, commented: “Over the past decade, HFML has grown from being our in-house team into a strong, global asset manager responsible for £43.9bn.
“We are pleased to see the business flourish under new ownership, making the sale of our residual shareholding a simple, logical next step.
“We retain strong links with HFML and look forward to working with them as we focus on managing £57.5bn in assets towards our 2035 net-zero goal as a responsible and engaged investor on behalf of our members.”
