NAVIGATOR GLOBAL INVESTMENTS LIMITED (ASX: NGI)

Lighthouse acquisition of Mesirow Financial’s Multi-Manager Hedge Fund Business - NGI Group, a Company engaged in the provision of investment management products and services to investors globally via Lighthouse Investment Partners, LLC (Lighthouse) had lately entered into an agreement to acquire assets from Mesirow Advanced Strategies (MAS), the multi-manager hedge fund division of Mesirow Financial. MAS and Lighthouse have got a positive response to the proposed transaction and about US$5.2 billion of assets under management are expected to be transitioned to Lighthouse at closing (around July 01, 2018). Further, average net management fee earned on the transitioned assets is expected to be 65 basis points per annum. The acquired assets will initially have lower operating margins, and these will normalise over three years as Lighthouse works to integrate the assets.
 
Going back in time, NGI’s United States subsidiary, Lighthouse Investment Partners, LLC had signed a definitive agreement to acquire substantially all the assets of Mesirow Advanced Strategies (‘MAS’), the multi-manager hedge fund division of Mesirow Financial. Mesirow Financial will continue to operate its other investment management businesses. It is expected that this may involve a higher level of investor redemption activity than Lighthouse has experienced over the past few years.
 

March 2018 performance estimates for select Lighthouse Commingled Funds (Source: Company Reports)

It is anticipated that the transaction will be completed on 1 July 2018 as it is subject to certain limited customary closing conditions. Despite the higher level of operating expenses incurred in H1 2018 compared to historical periods, the Group expects to report an increase in EBITDA for the half year of approximately 14 per cent as compared to that of the corresponding 2017 half year period.

Meanwhile, it was noted that Assets Under Management increased from USD 5.67 billion as on 31 December 2017 to USD 5.77 billion as on 31 March 2018 and it is based on performance estimates which may be subject to revision near the 20^th business day of the month and upon final audit.

The stock was up by 40.13 per cent in the past six months and rose up by 6.91 per cent in the past one week. It is worth noting that the stock is now 434.57 per cent up in last 5 years and just after the update on the lighthouse acquisition, the stock climbed up by 6.24 per cent as on 31 May 2018. We give a “Hold” recommendation at the current market price of $ 4.6 while we wait to see the impact from the acquisition.

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