Markets Live, Wednesday March 16, 2022
Troubled investment manager Magellan has launched a share buy-back in an effort to enhance shareholder value after a series of punishing events.
ASX-listed Magellan told the market on Wednesday it would buy back up to 10 million shares, or 5.4 per cent of shares on issue.
Magellan’s shares are currently at its lowest point in seven years, closing at $13.86 per share on Tuesday. A buyback would enhance shareholder value by shrinking the share register to concentrate value.
Magellan chair Hamish McLennan said the on-market buyback “represents an effective way to enhance value for shareholders”.
“The buy-back is consistent with our aim to deliver capital efficiency, solid dividends and attractive returns for shareholders with a focus on our core funds management business,” Mr McLennan said.
“The timing and actual number of shares purchased will depend on the prevailing share price, market conditions and other relevant factors. All ordinary shares purchased pursuant to the BuyBack will be cancelled,” Magellan said in a statement.
The potential for a buy-back was first flagged during Magellan’s interim results in February, where management fielded questions from analysts over the sudden departure of star investor Hamish Douglass.
Magellan’s funds under management and share price has continued to slide to new lows after a series of events at the company started with the abrupt resignation of chief executive Brett Cairns in December.
This was followed by Magellan losing its largest investment mandate, St James’s Place, which was worth around $23 billion.
After being forced to disclose personal issues to the market, Mr Douglass took an extended period of medical leave and it is unclear when he will return.
Magellan disclosed earlier this week that it had lost another $10 billion in assets in two weeks, after institutional and retail clients ripped money from the firm amid the ongoing uncertainty.
Magellan co-founder Chris Mackay is travelling to Europe to meet with institutional clients this month to answer questions about the business.
Read More: Markets Live, Wednesday March 16, 2022