Strengthening its fixed income assets, Janus Capital Group, Inc. JNS completed the acquisition of 51% stake in Australia based Kapstream Capital Pty Limited. The deal includes around $85 million as an initial upfront cash consideration.
Founded in 2006, Kapstream Capital Pty Limited is a global unconstrained fixed income asset manager. As of Mar 31, 2015, the company had $6.6 billion in assets under management.
The transaction boosts the total Janus Global Macro Fixed Income assets under management to $8.7 billion as of Mar 31, 2015. The deal not only enhances Janus Capital’s fixed income assets, but makes the company’s Global Macro Fixed Income team stronger with the joining of fixed income pro, Kumar Palghat who co-founded Kapstream Capital.
As part of the deal, Palghat will join Janus Capital as co-portfolio manager supporting ‘Bond King’ Bill Gross who will remain the chief portfolio manager of the Janus Global Unconstrained Bond strategy. Notably, Gross had worked with Palghat at Pacific Investment Management Company (PIMCO) for 10 years.
According to Dick Weil, Chief Executive Officer of Janus Capital, “We are delighted to offer our clients the highest level of macro fixed income investment expertise with Bill Gross, Kumar Palghat and the highly sophisticated professionals that make up the Kapstream team.” He further added, “Combining the success and experience of Kapstream’s unconstrained fixed income business with Bill’s reputation as one of the world’s most successful fixed income investors creates a powerful opportunity for our clients and for Janus Capital.”
Gross, who joined Janus Capital in Sep 2014 after departing from PIMCO in Sep 2014, is striving hard to lift the performance of the $1.5 billion Janus Global Unconstrained Bond Fund. Though Gross won $500 million investment by Soros Fund Management LLC, led by famous investor George Soros and Gross himself has invested $700 million from his pocket, the fund faced outflows in February and May.
According to Morningstar, as of Jun 29, the fund had lost 0.8% since Gross took over, compared with a gain of 0.18% for an industry benchmark rate. This reflects that the fund is behind 65% of its peer funds. However, the latest deal keeps us optimistic about the future performance of the fund.
Janus Capital currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the finance space include Legg Mason Inc. LM, Manning & Napier, Inc. MN and Garrison Capital Inc. GARS. While both Legg Mason and Manning & Napier carry a Zacks Rank #2 (Buy), Garrison Capital sports a Zacks Rank #1 (Strong Buy).
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