Affiliated Managers Group, Inc. (NYSE: AMG), a leading partner to
independent active investment management firms globally, has
entered into a definitive agreement to acquire a majority equity
interest in Parnassus Investments (“Parnassus”). After the closing
of the transaction, Parnassus partners will continue to own a
substantial portion of the equity of the firm and direct its
day-to-day operations consistent with AMG’s partnership approach,
which is recognized by the marketplace for preserving the operating
and investment independence of AMG Affiliates.
With approximately $47 billion under management as of June 30,
2021, Parnassus has been a pioneer in active responsible investing
for more than 35 years, focused on investing in companies that
generate returns and also have a positive impact on society.
Founded in San Francisco in 1984, the firm integrates deep
fundamental and environmental, social, and governance (ESG)
research into its collaborative, high-conviction, low turnover
investment process, and is today the largest pure-play ESG mutual
fund company in the U.S. With more than 95% of its mutual fund AUM
in strategies with a Morningstar RatingTM of 4 or 5 stars, and each
of its equity funds maintaining top sustainability ratings,
Parnassus intends to provide investors with attractive long-term,
risk-adjusted returns by investing in high-quality businesses at
reasonable prices. As with all AMG Affiliates, the Parnassus
investment process will not change as a result of its partnership
with AMG, and the Parnassus investment team will remain fully
independent.
“We are very pleased to have the opportunity to partner with
Parnassus, as we have tremendous respect for its multi-decade work
in sustainable investing and the high-quality business built by an
outstanding management team,” said Jay C. Horgen, President and
Chief Executive Officer of AMG. “Having known the senior partners
for more than a decade, AMG has developed a unique relationship
with this team and closely followed the evolution of their
business; when the time was right for Parnassus to choose a
permanent partner and complete the first generational transition in
the firm’s long-term succession plan, the team chose AMG. For
nearly four decades, and across numerous market cycles, Parnassus
has integrated fundamental financial and ESG research with the goal
of achieving attractive risk-adjusted returns for its clients. As
our third Affiliate wholly dedicated to responsible and impact
investing, AMG’s partnership with Parnassus further enhances our
strategic participation in ESG investing, one of the
fastest-growing segments in the investment industry, and an area of
increasingly significant focus for clients globally. I am very
pleased to welcome Ben Allen, Todd Ahlsten, and their partners to
our Affiliate group.”
“Given our longstanding relationship with AMG, and its
three-decade history of successful partnerships with independent
active investment firms, we are excited about our new partnership.
We believe it provides long-term certainty for our clients and
enhances the competitive positioning of our business,” said
Benjamin E. Allen, Chief Executive Officer of Parnassus. “Since our
founding, we have been committed to remaining independent and
investing based on both Principles and Performance®. AMG’s unique
partnership approach preserves our firm’s entrepreneurial and
investment-centric culture, which is essential to our clients and
team; the cultural alignment between Parnassus and AMG, with our
firms’ respective long-term partnership orientations and strong
shared belief in sustainable investing, made our decision clear.
Todd Ahlsten and I have committed to provide leadership to our firm
for many years to come, and other members of the partnership group
will be aligned with the long-term interests of our investors, and
AMG, through equity ownership in Parnassus. With this new
partnership, we are well-positioned to continue to build an
enduring, multi-generational, partner-owned investment firm that
serves the sustainable investing needs of our
clients.”
The closing of the transaction will represent the culmination of
the transition from founder Jerome Dodson, who retired from
portfolio management and all managerial duties in 2020, to the next
generation of leadership. Mr. Dodson and his family will no longer
retain any ownership of Parnassus. Mr. Dodson said, “I started
Parnassus Investments more than 35 years ago because I believed
that one could invest according to their values and still beat the
market. I’m gratified to see how many investors are now investing
the way we have at Parnassus for so many years. I am proud of
Parnassus’ seasoned leadership team and very pleased that the
company we built will live on to serve generations of clients to
come.”
The terms of the transaction were not disclosed. AMG expects
that the investment in Parnassus will contribute approximately $70
million to Adjusted EBITDA and $1.30 to Economic earnings per share
in 2022, and the transaction will be funded with existing corporate
resources. Mr. Allen and Mr. Ahlsten will enter into long-term
employment agreements with the firm. The transaction, which is
expected to close during the second half of 2021, is subject to
customary closing conditions and regulatory approvals.
Moelis & Company LLC acted as exclusive financial advisor to
Parnassus Investments.
About AMGAMG is a leading partner to
independent active investment management firms globally. AMG’s
strategy is to generate long-term value by investing in a diverse
array of excellent independent partner-owned firms, through a
proven partnership approach, and allocating resources across AMG’s
unique opportunity set to the areas of highest growth and return.
AMG’s innovative partnership approach enables each Affiliate’s
management team to own significant equity in their firm while
maintaining operational and investment autonomy. In addition, AMG
offers its Affiliates growth capital, global distribution, and
other strategic value-added capabilities, which enhance the
long-term growth of these independent businesses, and enable them
to align equity incentives across generations of principals to
build enduring franchises. As of March 31, 2021, AMG’s aggregate
assets under management were approximately $738 billion across a
broad range of active, return-oriented strategies. For more
information, please visit the Company’s website at www.amg.com
About Parnassus InvestmentsFounded in 1984,
Parnassus Investments is a pioneer in socially responsible
investing. The firm invests responsibly to build wealth for its
clients by selecting businesses that the investment team believes
have increasingly relevant products or services, sustainable
competitive advantages and quality management teams for their high
conviction portfolios. Every investment must meet rigorous
fundamental and ESG criteria. More information is available at
parnassus.com
Certain matters discussed in this press release may constitute
forward-looking statements within the meaning of the federal
securities laws, and could be impacted by a number of factors,
including those described under the section entitled “Risk Factors”
in AMG’s most recent Annual Report on Form 10-K, as such factors
may be updated from time to time in the Company’s periodic filings
with the SEC, which are accessible on the SEC's website at
www.sec.gov. AMG undertakes no obligation to publicly update or
review any forward-looking statements, whether as a result of new
information, future developments or otherwise, except as required
by applicable law. From time to time, AMG may use its website as a
distribution channel of material Company information. AMG routinely
posts financial and other important information regarding the
Company in the Investor Relations section of its website at
www.amg.com and encourages investors to consult that section
regularly.
The Morningstar RatingTM
for funds, or “star rating,” is calculated for
managed products (including mutual funds, variable annuity and
variable life subaccounts, exchange-traded funds, closed-end funds,
and separate accounts) with at least a three-year history.
Exchange-traded funds and open-ended mutual funds are considered a
single population for comparative purposes. It is calculated based
on a Morningstar Risk-Adjusted Return measure that accounts for
variation in a managed product’s monthly excess performance,
placing more emphasis on downward variations and rewarding
consistent performance. The top 10% of products in each product
category receive 5 stars, the next 22.5% receive 4 stars, the next
35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom
10% receive 1 star. The Overall Morningstar Rating for a managed
product is derived from a weighted average of the performance
figures associated with its three-, five-, and 10-year (if
applicable) Morningstar Rating metrics. The weights are: 100%
three-year rating for 36-59 months of total returns, 60% five-year
rating/40% three-year rating for 60-119 months of total returns,
and 50% 10-year rating/30% five-year rating/20% three-year rating
for 120 or more months of total returns. While the 10-year overall
star rating formula seems to give the most weight to the 10-year
period, the most recent three-year period actually has the greatest
impact because it is included in all three rating periods. As of
04/30/21, the Parnassus Core Equity Fund – Investor Share was rated
against the following numbers of Large Blend funds over the
following time periods: 1,224 funds in the last three years, 1,055
funds in the last five years and 795 funds in the last 10 years.
The Fund received a Morningstar Rating of 5, 5 and 5 stars for the
3-, 5- and 10-year periods, respectively. The Parnassus Mid Cap
Fund – Investor Share was rated against the following numbers of
Mid-Cap Blend funds over the following time periods: 377 funds in
the last three years, 308 funds in the last five years and 215
funds in the last 10 years. The Fund received a Morningstar Rating
of 4, 4 and 5 stars for the 3-, 5- and 10-year periods,
respectively. The Parnassus Endeavor Fund – Investor Share was
rated against the following numbers of Large Value funds over the
following time periods: 1,131 funds in the last three years, 1,001
funds in the last five years and 727 funds in the last 10 years.
The Fund received a Morningstar Rating of 5, 5 and 5 stars for the
3-, 5- and 10-year periods, respectively. Past performance is no
guarantee of future results. Morningstar Rating is for the Investor
share class only; other classes may have different performance
characteristics.
The Morningstar®
Sustainability Rating is a measure of how well the
portfolio holdings are managing their ESG Risk relative to the
portfolio’s Global Category peer group. The Morningstar Historical
Sustainability Score is a weighted average of the trailing 12
months of Morningstar Portfolio Sustainability Scores. More-recent
portfolios are weighted more heavily than older portfolios. Based
on their Morningstar Historical Sustainability Score, funds are
assigned absolute category and percent ranks within their
Morningstar Global Categories. Higher ratings are better and
indicate that a fund has, on average, more of its assets invested
in companies that have lower ESG risk as characterized by
Sustainalytics. The Morningstar Sustainability Rating is depicted
by globe icons where High equals 5 globes and Low equals 1 globe.
Morningstar updates its Sustainability Ratings monthly and uses
Sustainalytics’ ESG scores from the same month as the portfolio
as-of date. Visit
http://corporate1.morningstar.com/SustainableInvesting/ for more
detailed information about the methodology and calculation
frequency. As of 03/31/21, the Parnassus Core Equity Fund –
Investor Share received a Morningstar Sustainability Rating of High
out of US Equity Large Cap Blend funds based on 100% of AUM. The
Parnassus Mid Cap Fund – Investor Share received a Morningstar
Sustainability Rating of High out of US Equity Mid Cap funds based
on 100% of AUM. The Parnassus Endeavor Fund – Investor Share
received a Morningstar Sustainability Rating of High out of US
Equity Large Cap Blend funds based on 100% of AUM. The Parnassus
Mid Cap Growth Fund – Investor Share received a Morningstar
Sustainability Rating of High out of US Equity Mid Cap funds based
on 93% of AUM. Sustainalytics provides company-level analysis used
in the calculation of Morningstar’s Sustainability Score. Visit
http:// corporate1.morningstar.com/SustainableInvesting for more
detailed information on the methodology and calculation
frequency.
Mutual fund investing involves risk, and loss of principal is
possible. There are no assurances the Fund’s investment objectives
and ESG strategies will be successful.
Before investing, an investor should carefully consider the
investment objectives, risks, charges, and expenses of the fund and
should carefully read the prospectus or summary prospectus, which
contain this information. A prospectus or summary prospectus can be
obtained on the website, www.parnassus.com, or by calling (800)
999-3505.
The Parnassus Funds are distributed by Parnassus Funds
Distributor, LLC.
AMG Investor Relations:Anjali Aggarwal AMG Media
Relations: Ann Imes (617) 747-3300ir@amg.compr@amg.com
Parnassus Media Relations:Joe Sinha(415)
778-2678joe.sinha@parnassus.com
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