Magellan (ASX:MFG) share price slides lower after investing in Barrenjoey

The Magellan Financial Group Ltd (ASX: MFG) share price is trading lower today after announcing a major investment in Barrenjoey…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Magellan Financial Group Ltd (ASX: MFG) share price is dropping lower today following the release of an announcement.

At the time of writing, the fund manager's shares are down slightly to $56.79.

What did Magellan announce?

This morning Magellan announced that it has become a foundation investor in Barrenjoey Capital Partners.

Barrenjoey is a newly established Australian-based full-service financial services company. It will provide corporate and strategic advisory, equity and debt capital market underwritings, cash equities, research, prime brokerage, and traditional fixed income services to Australian and international clients.

The financial services company will be led by a team of experienced executives. This includes Guy Fowler as Executive Chairman and the former Challenger Ltd (ASX: CGF) leader, Brian Benari, as Chief Executive. They will be supported by John Cincotta, Matt Hanning, and Chris Williams as founding partners.

The Chairman of BHP Group Ltd (ASX: BHP), Ken MacKenzie, is due to join in early 2021 as Barrenjoey's Senior Strategy Partner. Mr MacKenzie will be available to provide strategic advice and senior counsel to CEOs, chairpersons, boards, executive teams and business owners in developing and executing their long-term strategies.

Former Telstra Corporation Ltd (ASX: TLS) executive, Cynthia Whelan, will join as a Senior Adviser.

Partnership model returns.

Magellan's CEO, Brett Cairns, was very pleased to be a founding partner in Barrenjoey and sees a lot of potential in its offering.

He said "Magellan is delighted to be a founding partner of Barrenjoey. We believe the partnership model that leaves control, equity ownership and core decision making with the executives is proven and powerful."

"This partnership model was adopted historically by many investment banks but unfortunately seems to have disappeared over the last 20 years. By offering true ownership and autonomy to staff, we believe that Barrenjoey will be able to attract the best and brightest talent in the country providing clients with the best possible service and outcomes," he added.

What has Magellan invested?

Magellan has made an investment of both cash and scrip for a stake in Barrenjoey.

Its investment comprises the issue of approximately 1.2 million Magellan shares and $90 million of cash, to take a 40% economic ownership interest in Barrenjoey. Though, it will only have a 4.99% voting interest.

The fund manager is also providing Barrenjoey with a $50 million working capital facility to support the growth of the business.

Mr Cairns said "This investment represents a rare opportunity to generate attractive financial returns together with meaningful optionality and diversification prospects for Magellan and its stakeholders over the long term. I look forward to joining the Board of Barrenjoey."

Should you invest $1,000 in Challenger Limited right now?

Before you buy Challenger Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Challenger Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited and Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A corporate team or board stands together and looks out the window.
Technology Shares

WiseTech shares charge higher on $3.5b acquisition news

This tech stock is ending the week positively. But why?

Read more »

Two brokers pointing and analysing a share price.
Share Market News

Fortescue shares: Buy, hold, or sell?

How are analysts feeling about this popular stock? Let's find out.

Read more »

A young woman in a red polka-dot dress holds an old-fashioned green telephone set in one hand and raises the phone to her ear representing the Telstra share price and the opportunity for investors in FY23
Opinions

The Telstra share price hit a 52-week high this week, is it still a buy?

Is buying Telstra still a good call after its rise?

Read more »

gaming asx share price rise represented by slot machine paying jackpot
Share Market News

Based on recent US casino trends, does Macquarie prefer Light & Wonder or Aristocrat shares?

The metrics of one of these ASX gaming shares look far more appealing, according to the top broker.

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Share Market News

5 things to watch on the ASX 200 on Friday

Will the market finish the week on a high? Let's find out.

Read more »

Person pressing the sell button on a smartphone.
Broker Notes

Sell alert! 3 ASX shares the brokers are calling time on

Brokers say it's time to hit the sell button on these ASX shares.

Read more »

A couple smile as they look at a pregnancy test.
Share Market News

After the recent debacle, what price target does Macquarie have on Monash IVF shares?

Supported by strong industry tailwinds, this ASX stock could be worth a second look.

Read more »

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

It was the ASX's fourth day of gains for the week today.

Read more »