Financial Engines, a US-based investment advisory firm, has agreed to acquire The Mutual Fund Store from private-equity firm Warburg Pincus and management for about $560m in cash and stock.
Following the agreement, Warburg Pincus will become Financial Engines’ major stockholder with beneficial ownership of about 12.5% and Warburg Pincus’ managing director, Michael Martin, will join Financial Engines board of directors.
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The transaction is scheduled to complete in the first quarter of 2016, subject to regulatory approvals and other customary closing conditions.
Financial Engines expects the deal to produce 2016 earnings per share accretion of 25% as well as increase the long-term growth rate of the combined company.
The Mutual Fund Store employs 345 employees and approximately 84,000 accounts at about 39,000 households and over $9.8bn in assets under management.
Financial Engines president and CEO Lawrence Raffone said: "This acquisition advances our vision to provide independent advisory services to more people and we believe will also fuel significant future growth."
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By GlobalDataThe Mutual Fund Store CEO John Bunch said: "We are thrilled to join forces with Financial Engines to provide comprehensive advisory services through the workplace."
Financial Engines CFO Ray Sims said: "We believe the acquisition to be significantly accretive to adjusted earnings per share in fiscal year 2016. Importantly, post-closing we expect to remain debt free and we expect to generate significant free cash flow that will enable us to continue to invest in the business and drive growth initiatives."
