ASX-listed global equities manager, Magellan, entered a trading halt last Friday ahead of “the termination of a material contract” expected to take the group’s funds under management below A$100 billion.
Australian media reports suggest Magellan is poised to lose an estimated A$18.6 billion institutional mandate with UK financial advisory giant, St James Place (SJP) – the manager’s largest, and first, offshore institutional client.
As at November 30, Magellan held about A$116 billion in assets under management, split between over A$86 billion in institutional money and over A$30 billion from retail clients.
SJP, the UK’s largest wealth advisory firm with almost £150 billion under management, first appointed Magellan to its multi-manager panel in 2011 in a contract now reportedly worth about A$60 million in annual fees.
In March this year, SJP put Magellan on its ‘amber’ watch list, putting the manager on notice of closer monitoring in the wake of underperformance.
Win Robbins, independent member of the SJP investment committee, says on the UK group’s website: “We don’t make the decision to change managers lightly. But if we truly believe that things are not going to change in the future, then that’s the point at which we take the decision to find somebody better to do the job.”
News of the pending mandate loss follows a torrid couple of weeks for Magellan that included the surprise exit of CEO, Brett Cairns, and revelations of a marriage split for founder and chief investment officer, Hamish Douglass.
Magellan remains a popular global equities option among NZ financial advisers and retail clients.
The Magellan share price closed slightly up last week at A$29.36 – before the after-hours trading halt announcement – but still well off the 12-month high of almost A$57.
“Unless ASX decides otherwise, the securities will remain in trading halt until the earlier of the commencement of normal trading on Tuesday, 21 December 2021 or when the announcement is released to the market,” the Magellan note says.