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Brexit will work out rationally, says new owner of BT pension fund manager

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One of the US' biggest independent fund managers believes Brexit will work out "rationally" after snapping up a majority stake Britain's Hermes Asset Management.

Federated Investors agreed to buy a 60 per cent stake in Hermes on Friday from BT's pension trustees, a deal that values the London-based firm at £410m.

Originally named PostTel Investment Management, Hermes was established in the 1980s to look after the assets of the Post Office pension scheme. With the pension scheme subsequently split into separate BT and Post Office funds, the BT Scheme bought the Post Office's share and rebranded it as Hermes.

Federated vice-chairman Gordon Ceresino said while it was right people had concerns about Brexit, the key was "to analyse it and get your arms around it".

He told City A.M.: "But it will work out rationally, we prepared for it.

“Because we take a long-term view, like other events within our industry we have to weather the storm.

You can go back to the various crises such as 2008 or the tech bubble in 2001. These things happen. But if you have two strong businesses as we are putting together here. Whether it is Brexit or any other challenges, those are things you have to overcome and were confident that between to the two companies we are prepared to overcome them.

Read more: BT retirement fund sells £250m Hermes stake to US fund management goliath

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Hermes' $44.6bn (£33bn) of assets under management will be swallowed up by Pittsburgh-headquartered Federated, taking investments under its control to $442bn.

The BT Pension Scheme will have the option to sell further slices of Hermes to Federated over the next three to six years.

Saker Nusseibeh, Hermes chief executive explained how the firm had been transformed from "a loss-making place nine years ago to where we are making a lot of money".

He said: “We took it from a place where we had no third-party clients to where have 70 per cent income coming from a third-parties.

The next stage of this growth, we needed a partner who understood what we were about but would also offer us complementarity.

Ceresino ruled out any job cuts as part of the deal, which has seen Federated circling Hermes for around five years. A formal bidding process started last August with Federated among a number of interested parties.

And he said the US firm's long-term keen interest will help the two firms better integrate.

"We get to start day one doing the fun stuff, rather than trying to get to know each other," Ceresino said.

Read more: Hermes GPE raises $620m to plough in to co-investment deals

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