WisdomTree to buy ETF Securities’ European commodities platform for $611m
WisdomTree, the US-listed asset manager, has agreed to pay around $611m in cash and shares to acquire a $17.6bn European unit of ETF Securities, a London-based provider of exchange traded funds and products.
The deal, which covers ETF Securities’ exchange-traded commodity, currency and short-and-leveraged business, will increase WisdomTree’s assets under management to around $66bn. It will rank as the ninth largest exchange traded products provider globally.
“The acquisition will immediately add scale, profitability and diversification to our business in Europe,” said Jonathan Steinberg, WisdomTree chief executive and president.
Growth across the ETF industry is accelerating with a fourth consecutive year of record-breaking growth expected in 2017. Competition is also intensifying as asset managers strive to win a share of this market.
Invesco, the US asset manager, has made two acquisitions this year in a drive to strengthen its position. It paid $1.2bn to buy the ETF arm of Guggenheim in addition to acquiring the London-based ETF provider Source. JPMorgan plans to offer ETFs in Europe while Franklin Templeton has launched ETF operations in the US, Canada and Europe.
The deal with ETF Securities marks WisdomTree’s second strategic deal in Europe following the acquisition in 2014 of a majority stake in Boost, a small London-based ETF manager.
WisdomTree will pay $253m in cash and 30 million shares, valuing the total consideration at $611m based on Friday’s closing price, WisdomTree said. The cash element will be funded by $200m of newly issued debt plus $53m of cash on hand.
The stock portion will be made up of 15,250,000 shares of common stock and 14,750 shares of a new class of Series A non-voting preferred stock that can convert into 14,750,000 shares of common stock, but with a voting cap of 9.99 per cent. The shares will give ETF Securities an 18 per cent stake in the group assuming all shares are converted.
WisdomTree will adjust its quarterly dividend to $0.04 per share, it said, starting with the dividend scheduled for payment in the first quarter of 2018. The deal is expected to close late in that quarter.