The Magellan Financial Group Ltd (ASX: MFG) share price is falling in early trade today.
At the time of writing, Magellan shares are down 2% to $9.73 apiece.
It comes amid speculation the ASX financial share could be considering selling a stake in its business, The Australian reported this morning.
The rationale behind Magellan co-founders Hamish Douglass and Chris Mackay selling part of the business is that the pair could use the proceeds from the sale for investments elsewhere.
Their fund management business also isn't doing too well as it's hemorrhaging clients, despite vowing to almost double its funds under management (FUM) over the next five years.
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Magellan's shares could be bought at a discount
This thesis is plausible despite shares of the fund manager losing 53.25% of their value year to date. This means the potential acquirer could snap up the company at a steep discount compared to last year's share price.
My Fool colleague Zach notes that Magellan's funds under management (FUM) shrank by $3.2 billion from 31 August to 30 September this year, bringing the total down to $50.9 billion.
By comparison, Magellan's FUM in November last year was $116.4 billion.
Douglass sold 760,000 worth of his personal shares in July 2022, which could suggest the co-founder is redirecting his capital to different efforts.
Who could be the potential suitor?
The Australian noted that a 20% stake in Magellan would be available for purchase if the pair offered their stakes for sale. It said an investment bank would probably be needed to be consulted to meet compliance regulations.
It was also suggested that a "large offshore fund manager" would be the most likely potential suitor. Such a purchase could help them establish a strategic presence in Australia through its acquisition of Magellan shares.
Magellan's competitors have also been reportedly approached to see if they were interested in buying out Magellan. Banks facilitating this were said to be Bank of America and Goldman Sachs.
Magellan share price snapshot
The Magellan share price is down 72% over the past year. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down 8% over the same period.
The company's market capitalisation is around $1.82 billion.
