Huge news on the financial front: Hennessy Advisors of Novato is about to become $1.9 billion bigger — more than double its staff and more than triple its managed assets.
The firm announced Wednesday that it has signed an agreement with FBR Fund Advisers to purchase the assets related to the management of the entire family of 10 FBR Funds, according to a Hennessy Advisors press release. Several members of FBR Funds' leadership team will join Hennessy, a publicly traded investment manager of domestic and international equity products.
The FBR Funds have assets exceeding $1.9 billion, which would bring total assets managed by Hennessy Advisors to more than $2.7 billion.
"This is exactly the type of acquisition that we have been working hard to find for some time," said Neil Hennessy, the chairman, CEO and president of Hennessy Advisors. "I have been actively searching for an acquisition of over $1 billion. Because of our structure and expertise in the asset management industry, we are uniquely capable of handling such a large acquisition and will be able to quickly and seamlessly integrate the FBR Funds into our business."
The deal is expected to be completed in the third quarter of 2012. It is subject to regulatory review and the approval of the Hennessy Funds Board of Trustees, the FBR Funds Board of Trustees and the FBR Funds' shareholders.
Hennessy said the move will strengthen the company's marketing and distribution, trading and compliance efforts through the addition of these FBR employees.
"After the acquisition, Hennessy Advisors will more than triple our assets under management," he said, "and we will continue to actively look for more deals to grow the company in the future."
Hennessy Advisors, with 11 employees now, expects to add 12 more following the acquisition. New employees will most likely remain in their current locations in Boston and Arlington, Va., meaning no additional office space will be needed in Novato, Hennessy said.
Hennessy Advisors will become the investment manager of the FBR Funds. The assets related to the FBR Large Cap Fund, the FBR Small Cap Fund and the FBR Mid Cap Fund will merge into the Hennessy Cornerstone Large Growth Fund, the Hennessy Cornerstone Growth Fund and the Hennessy Focus 30 Fund, respectively, with shareholders of those funds becoming shareholders of the applicable Hennessy Fund.
The remaining seven FBR funds will move under the Hennessy investment management umbrella and will continue to be managed by the same portfolio managers that oversee the portfolios today.
Dave Ellison, FBR President and CIO, and Winsor Aylesworth, FBR Portfolio Manager, will join the Hennessy team of employees and continue the day-to-day management of the FBR Gas Utility Index Fund, the FBR Small Cap Financial Fund, the FBR Large Cap Financial Fund and the FBR Technology Fund. The FBR Focus Fund will continue to be managed by David Rainey, Brian McCauley and Ira Rothberg, who will serve as sub-advisors to the Fund, with Hennessy as the investment manager.
The FBR Balanced Fund and the FBR Core Bond Fund will retain their current sub-advisory relationships, with Hennessy Advisors as the investment manager.
In addition to members of the portfolio management team, members of the current FBR distribution, marketing, trading, compliance and trading departments will also join the Hennessy Advisors team.
"We couldn't be more pleased to be joining the Hennessy family," Dave Ellison, President and CIO of FBR Fund Advisers, said in the release. "We believe there is great synergy between our firms, and we look forward to continuing to provide excellent portfolio management under the leadership of Hennessy Advisors, Inc."
Richard J. Hendrix, President and CEO of FBR & Co., the parent company of FBR Fund Advisers, said Hennessy is committed to the asset management business.
"(It) has a solid reputation in the mutual fund industry," Hendrix said in the release. "With the addition of key FBR Fund Advisers personnel to the Hennessy team, I am confident these fund shareholders will be well served by Neil Hennessy and Hennessy Advisors."