Janus Capital Is Riding on Gross Expertise, International Funds
The Kapstream Capital acquisition
Janus Capital Group (JNS) announced its acquisition of a 51% stake in Kapstream Capital on July 1, 2015. Kapstream is a global unconstrained fixed income asset manager. Its acquisition will further expand JNS’s fixed income offerings and its global unconstrained fixed income team. The company saw net inflows of $300 million during the third quarter.
The transaction was valued at $94.4 million. Of that, $84.8 million was to be paid in cash and the remaining $9.6 million was to be contingent upon the performance of Kapstream’s funds. JNS also has an option to purchase the remaining 49% stake from the existing management by the end of the fourth year following the completion of the transaction.
Assets, support for Gross
Kapstream contributed $4.9 million in revenues and $2.1 million in operating income to Janus Capital. The company will bring in additional assets totaling $6.6 billion. Kapstream’s chief investment officer, Kumar Palghat, who once worked with Bill Gross at Pacific Management, will be assisting Gross with the fund’s management.
Gross hasn’t been as successful in attracting funds as Janus Capital had expected, primarily because of difficult market conditions and lower spreads.
Palghat will continue to manage the Kapstream Absolute Return Income Fund, serving clients in Australia. Gross’s fund, the Janus Global Unconstrained Bond, returned only 0.1% in 1H15, trailing behind the funds of more than 75% of fixed asset managers. An expanded fixed income asset management team should help Janus Capital, but the company is still betting big on Bill Gross and the performance of his managed funds.
Janus Capital posted EBITDA (earnings before interest, taxes, depreciation, and damortization) of $315 million in the last fiscal year. Here’s how its peers compared in the same quarter:
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BlackRock (BLK) – $4.7 billion
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T. Rowe Price Group (TROW) – $2 billion
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Bank of New York Mellon (BK) – $6.4 billion
Together, these companies form 0.9% of the iShares Russell 1000 Value ETF (IWD).
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