The merger between U.S.-based Janus Capital Group and U.K.-based Henderson Group announced Monday is designed “to create a global asset manager with diverse geographic footprint,” according to the official announcement. But while it is expected to increase the distribution of the firms’ mutual funds, under the new Janus Henderson Global Investors name, it’s not clear the merger will curb the asset outflows of either firm.
Since 2000, Janus has had only two years of net inflows, and outflows this year through August were $1.6 billion—almost as much as the $1.7 billion for all of 2015, according to Morningstar.
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Jefferies downgraded Janus shares from a buy to a hold on Monday, based on valuation.
“We view shares of the pro forma earnings profile as fairly valued at approximately. 14.5x 2017 EPS, which represents a premium to its peers,” wrote analyst Daniel Fannon. “While we view the proposed transaction positively from a strategic sense, growth for the combined entity will remain difficult given current industry trends.”