Shareholder activist Trian Fund Management LP has taken big stakes in investment firms
Invesco Ltd.
and
PLC and plans to agitate for deal making aimed at building a rival to the biggest asset managers in the world.
Trian has accumulated 9.9% stakes in both Invesco and Janus Henderson, with the two positions totaling roughly $900 million, people familiar with the matter said.
The money comes in part from a long-term fund Trian has built with the goal of bringing consolidation to the asset-management industry, which has been buffeted by plummeting fees and shrinking profit margins. Additional money remains in that fund that can be put to use for future positions in the sector, the people said. The fund’s existence hasn’t previously been reported.
Trian believes Invesco has the potential to grow by acquiring rivals such as Janus Henderson, and wants to work with management and the board to build a large asset manager that can better weather the challenges facing the industry and compete with larger rivals like
BlackRock Inc.
Executives at Trian, which was founded by Nelson Peltz, Ed Garden and Peter May, have had a conversation with Invesco leadership, the people said. Among their current asks: Appoint Messrs. Peltz and Garden to the Atlanta-based company’s board of directors.
“Invesco welcomes high-quality investors in our firm,” a spokeswoman said. “We continuously evaluate opportunities to further strengthen our ability to meet client needs and enhance long-term shareholder value. We value shareholder input and regularly engage with our major shareholders in a constructive dialogue.”
Janus Henderson said in a statement that it first heard from Trian about its investment on Thursday and doesn’t typically comment on the specifics of discussions with individual shareholders.
“We continue to make significant progress to increase profitability, drive organic growth, and identify and deliver cost savings, and are committed to delivering meaningful value for shareholders,” a Janus Henderson spokesman said.
Shares of both Invesco and Janus Henderson have been battered in recent years as traditional asset managers have struggled with seismic changes in the industry. Revenues for asset-management firms are down, as are profit margins, hurt by lower fees and by investors pulling money out of actively managed funds in favor of cheaper index funds and exchange-traded funds, or ETFs.
Invesco, which managed roughly $1.2 trillion as of the end of August and has a market value of $5.2 billion, is one of the larger players in the ETF business, but its suite of products still lags behind that of BlackRock and Vanguard Group Inc.
Janus Henderson, which managed just over $330 billion as of the end of June and has a market value of roughly $4 billion, is a smaller and more niche player in the ETF business.
Recent moves by the Federal Reserve to cut interest rates to near zero haven’t helped, either, forcing some big fund managers to waive fees to keep the yields investors earn on fixed-income investments in positive territory.
The threat from so-called passive funds emerged in the mid-1970s when Vanguard founder Jack Bogle introduced the first index-tracking mutual fund for everyday investors.
At the time, he was met with ridicule. Since then, the idea has taken off and many traditional asset managers have struggled to keep up. Last year, the amount of money in passive strategies surpassed the quantity invested in funds that try to beat the stock market for the first time ever.
BlackRock, Vanguard and State Street Corp. collectively controlled roughly 80% of all U.S. ETF assets as of August, according to Morningstar.
Even with consolidation, it will be tough to catch up to the likes of BlackRock, the world’s largest asset manager, which oversaw more than $7.3 trillion for clients as of June 30.
Trian is no stranger to the asset-management industry, and it has facilitated consolidation among fund managers before.
Most recently, its investment in Legg Mason Inc. ended with the firm being acquired by rival asset manager
Franklin Resources Inc.
Trian has also held investments in
Bank of New York Mellon Corp.
,
Lazard Ltd.
and State Street.
There have been a series of fund-manager mergers in recent years, though not all have been successful, with investors and individual fund managers sometimes fleeing.
Both Invesco and Janus Henderson have participated in the wave. Invesco agreed to buy OppenheimerFunds from Massachusetts Mutual Life Insurance Co. in 2018, and Janus Henderson is the product of a merger between Janus Capital Group Inc. and Henderson Group PLC.
Trian is known for encouraging change at companies it targets, such as a breakup or sale of underperforming divisions or moves to improve efficiency and better use capital. It often seeks board representation and tries to avoid public spats, unlike some of its more pugnacious rivals.
Most recently, Trian unveiled a 20 million-share stake in
Comcast Corp.
, arguing that the cable giant’s stock is undervalued. The stake amounts to roughly 0.4% of the Philadelphia-based company, whose market value is about $200 billion.
Trian, with $8.8 billion under management, is known for taking on other big prey such as
Procter & Gamble Co.
,
DuPont de Nemours Inc.
and
General Electric Co.
Write to Corrie Driebusch at [email protected]
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