Australian Ethical to acquire fixed income manager

Australian Ethical has entered into a binding agreement to acquire sustainable fixed income asset management business Altius Asset Management from Australian Unity.

The acquisition, when completed, will see Australian Ethical boost its funds under management (FUM) by circa $2 billion to $12.3 billion. 

Australian Ethical is set to pay Australian Unity $4.25 million in cash upon the completion of the transaction, which will be subject to the satisfaction of conditions precedent that are expected to occur in July.

An additional $1.25 million will be payable if Australian Unity investment meets certain transition steps and maintains agreed minimum FUM targets.

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While at a lower revenue margin consistent with the fixed income asset class, the transaction is expected to generate circa $1 million of EBITDA in the financial year 2025 and will be EPS accretive from financial close.

“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,” said Australian Ethical CEO John McMurdo.

“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.”

The combined Australian Ethical and Altius fixed income capability is expected to result in a sustainable fixed income team of seven and an expanded bond fund portfolio.

With the deal, Australian Unity will also become one of Australian Ethical’s largest institutional clients.

Dr Joe Fernandes, Australian Unity group CIO and executive general manager for funds management described the transaction as an endorsement of the sustainable investment approach Altius and Australian Unity have built and refined for more than a decade.

“The transaction with Australian Ethical aligns with Australian Unity’s strategy of partnering to accelerate its ambitions and focusing our commercial portfolio to areas where we can maximise impact,” Fernandes said.

Under the deal terms, Altius co-founders Bill Bovingdon, Chris Dickman, and Gavin Goodhand will join the Australian Ethical investment team under CIO Ludovic Theau.

Altius will continue to oversee Australian Unity’s cash and fixed interest portfolios, as well as the other fixed income funds and mandates currently managed by Altius.

The transaction also includes an ongoing commitment by Australian Ethical and Australian Unity to work together. 

“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,” Bovingdon said.

“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 revealed the company reached a milestone of $10 billion in FUM in March 2024.