BT Pension Scheme sells remaining stake in Hermes Fund Manager

BT Pension Scheme (BTPS) has agreed to sell its its remaining 29.5 per cent interest in Hermes Fund Managers Limited (HFML) to Federated Hermes for £116.5m.

Federated Hermes previously acquired a 60 per cent majority interest in HFML from BTPS in 2018, with this transaction also providing a call option for Federated Hermes to purchase the rest of HFML and BTPS a put option to sell its residual shareholding in HFML, in both cases between three-to-six years after the original agreement.

Following this deal, both parties have now agreed to close a transaction for BTPS’s remaining 29.5 per cent interest in HFML on 31 August 2021, agreeing to an independent fair valuation of HFML of £394.9m.

Based on this valuation, Federated Hermes will pay £116.5m to BTPS for the remaining shares, funded through a combination of cash and borrowings from its existing credit line.

Whilst BTPS will no longer have ownership interest, it remains a “significant client” of the firm, with $12bn in assets under management invested in several Federated Hermes sponsored or managed investment products.

BT Pension Scheme Management chief executive officer, Morten Nilsson, commented: “Over the last decade, HFML has grown from being our in-house team into a strong, global asset manager responsible for £43.9bn.

“We are pleased to see the business flourish under new ownership, making the sale of our residual shareholding a simple, logical next step.

“We retain strong links with HFML and look forward to working with them as we focus on managing £57.5bn in assets towards our 2035 Net Zero goal as a responsible and engaged investor on behalf of our members.”

Federated Hermes president and chief executive officer, J. Christopher Donahue, added: “Over the past three years, our shared values and mutually beneficial areas of expertise have given us the opportunity to engage with BTPS and enjoy an open dialogue with them as a key client and owner.

“Our combined investment management, stewardship and distribution experience make it prudent for FHI to complete this deal in a timely fashion so that we can continue to focus on expanding our investment and stewardship capabilities while growing our global distribution footprint.”

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