- Acquisition Expands Janus Capital’s Global Macro Fixed Income Team
- With this transaction, the total Janus Global Macro Fixed Income assets under management would be USD$8.7 billion
- Janus Capital has the option to purchase the remaining 49% interest in the future
- Gross, one of the founders of Kapstream and the Janus CEO worked together at PIMCO for 10 years
Janus Capital Group Inc. has announced and closed the acquisition of a majority interest in Kapstream Capital Pty Limited, a global unconstrained fixed income asset manager with USD$6.6 billion in assets under management as of March 31, 2015. With this transaction, the total Janus Global Macro Fixed Income assets under management would be USD$8.7 billion as of March 31, 2015. The transaction includes an initial upfront cash consideration of approximately USD $85 million. Janus Capital has the option to purchase the remaining 49% interest in the future.
“This transaction underscores three key commitments at Janus,” said Dick Weil, Chief Executive Officer of Janus Capital. “First, we want to be the place where great investors come to invest. Kapstream’s Kumar Palghat, Steve Goldman and Nick Maroutsos are simply great people and great investors. Second, we passionately believe that given volatility in global rates, investors need excellent fixed income choices that offer less exposure to interest rate risk. Third, the acquisition of Kapstream furthers our commitment to expand our fixed income capabilities as part of the firm’s intelligent diversification strategy. Kapstream has a rapidly growing business in one of the world’s best asset management markets. In addition, this transaction will reinforce our efforts to build a global macro fixed income team offering best-in-class global unconstrained bond strategies.”
Fixed income veterans Kumar Palghat and Nick Maroutsos founded Kapstream in 2006. Kapstream is one of the pioneers in managing global unconstrained fixed income. Gross, Weil and Palghat worked together at Pacific Investment Management Company for 10 years. The Global Macro Fixed Income team will remain a separate, autonomous and distinct capability from the Fundamental Fixed Income team. Janus is firmly committed to supporting and investing in both its Global Macro and Fundamental Fixed Income platforms, which offer highly complementary strategies.
Bill Gross, who joined Janus in September 2014, will remain the primary portfolio manager of the Janus Global Unconstrained Bond strategy, with Palghat supporting him as co-portfolio manager. Palghat will remain portfolio manager of the Kapstream Absolute Return Income Fund, and Goldman will assume a greater leadership role in managing Kapstream’s strategies. The strategies for both will not change. The combined Janus Global Macro Fixed Income team (comprised of 15 professionals following the completion of the transaction) will operate jointly from Kapstream’s existing base in Sydney, Australia, and Janus’ Newport Beach, California, office.
“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,” Weil said. “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.”
Kapstream’s unconstrained bond business in Australia will continue in essentially its current form. The flagship Kapstream Absolute Return Income Fund has delivered consistent, positive returns over the one-, three- and five-year periods ending March 31, 2015 (net of fees).
“I look forward to working with my old colleague, Kumar Palghat and the rest of the Kapstream team as we deliver value for our clients,” said Bill Gross, Portfolio Manager of the Janus Global Unconstrained Bond strategy.
“While our U.S. expansion plans began in 2013 with Kapstream’s Newport Beach, California, office opening, the opportunity to work with Bill again and create a truly global team, was not one we could pass up. Our combination brings a number of advantages, primarily giving our existing clients the benefit of additional input from Bill, one of the most highly regarded fixed income portfolio managers in the world, enabling us to deliver more value to our client portfolios,” Palghat said.