Invesco has agreed to acquire OppenheimerFunds from Massachusetts Mutual Life Insurance Company, the firms announced Thursday.
The transaction, expected to be completed by mid-2019, would make Invesco the 13th-largest asset manager in the world with more than $1.2 trillion under management, according to the release.
As part of the deal, MassMutual would receive a minority stake in Invesco representing about 15.5 percent of the company, as well as a seat on Invesco’s board of directors.
“The combination with OppenheimerFunds and the strategic partnership with MassMutual will meaningfully enhance our ability to meet client needs, accelerate growth, and strengthen our business over the long term,” said Martin Flanagan, president and CEO of Invesco, in a statement.
The deal is the latest in a string for acquisitions for Invesco, which in April completed its $1.2 billion purchase of Guggenheim Investment’s exchange-traded fund business.
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Asset management firms like Invesco have over the last few years turned to M&A to bolster their businesses against threats to profitability like the continued popularity of low-fee index funds. The trend is likely to continue, according to a survey of asset management CEOs published by consulting firm PricewaterhouseCoopers in March.
Thirty-five percent of the chief executives surveyed by PwC said they were planning mergers and acquisitions for this year, while 48 percent intended to expand their firms’ capabilities through strategic partnerships or joint ventures.
Invesco’s planned acquisition of OppenheimerFunds would strengthen the firm’s international and emerging markets capabilities, while also adding some $246 billion in assets under management.
“This is a compelling, highly strategic, and accretive transaction for Invesco that will help us achieve a number of objectives: enhance our leadership in the U.S. and global markets, deliver the outcomes clients seek, broaden our relevance among top clients, deliver strong financial results, and continue attracting the best talent in the industry,” Flanagan said.