Magellan soars as Barrenjoey merger reignites Macquarie debate
The junior Macquarie looks destined for the index but the market remains divided on whether it will spur copycats or a correction.
Magellan Financial Group shares soared on the back of its blockbuster planned merger with homegrown investment bank startup Barrenjoey Capital Partners, but the market is split on whether the new entity can emulate Macquarie to become Australia’s next financial powerhouse.
Firetrail Investments managing director Patrick Hodgens said the $5 billion Sydney fund manager “loves Barrenjoey” but even after buying the Magellan placement at $8.40 overnight was surprised by the market reaction.
Magellan surged as much as 30% after emerging from its trading halt on Tuesday and was up about 20% or around $10.19 heading into the close, with Hodgens tipping the fully integrated $3.84 billion entity to join the ASX 100 index within six months.
“It’s very fully priced but we can see that the market’s happy to buy into the expectations that it will grow,” Hodgens told a media lunch on Tuesday. “It’s a bet on what Barrenjoey will do to the whole business. To us, Magellan is about stopping redemptions and growing slowly but Barrenjoey is the growth engine.”
