NOVATO – Hennessy Advisors, Inc. (OTCBB: HNNA) has entered into a definitive agreement to purchase assets managed by Arlington, Va.-based FBR funds, a move that would grow the Novato-based company’s portfolio three-fold, to $2.7 billion, according to an announcement.
The transaction -- currently valued at $28 million -- is expected to be completed in the third quarter of 2012 and is subject to regulatory review and the approval of the Hennessy Funds Board of Trustees, the FBR Funds Board of Trustees and the shareholders of FBR Funds.
Assets related to the large, small and medium cap funds under FBR will merge into the parallel funds at Hennessy, resulting in a decrease in the expense ratio and increase in ratings for investors.Those FBR funds will no longer be actively managed.
FBR’s remaining seven funds will move under the Hennessy investment management umbrella but retain current portfolio managers.
Dave Ellison, FBR president and chief investment officer, and Windsor Aylesworth, FBR portfolio manager, will join Hennessy and continue management of the FBR Gas Utility Index Fund, as well as the small and large cap funds and the FBR Technology Fund. Other FBR managers will also continue, as sub-advisers under Hennessy. Members of the FBR distribution, marketing, trading and other departments will also join Hennessy.
In all, 12 staff from FBR will transition to Hennessy, remaining in Arlington, Va. and Boston, Mass. The 11-member staff in Novato will remain unchanged.
“We are absolutely thrilled to have the world-class FBR portfolio management team join our ranks, and we look forward to strengthening our marketing and distribution, trading and compliance efforts through the addition of these FBR employees,” said Neil Hennessy, chairman, CEO and president of Hennessy Advisors.
Currently, FBR Fund Advisers, Inc. is under the umbrella of FBR & Co. (NASDAQ: FBRC), an investment bank headquartered in Arlington, Va. The bank most recently reported $400,000 in net earnings during the first quarter of 2012, with its $1.9 billion in managed mutual fund assets earning $4 million during the same period.
FBR & Co. declined to comment on the asset sale.
Hennessy Advisors most recently reported total revenue of $1.73 million in the first three months of 2012, and the board of directors declared a quarterly dividend of 3.125 cents per share.
"We've made 13 acquisitions in the past," said Mr. Hennessy. "We needed to break that billion-dollar level on the acquisition side."
This story has been corrected to reflect the correct headquarters of FBR Funds.