Invesco Ltd., manager of the Aim and PowerShares funds, rose the most in three months after projecting higher earnings from its acquisition of Morgan Stanley’s investment unit.
The $1.5 billion purchase of Morgan Stanley’s retail investment-management business will add 17 cents a share in earnings in its first year and 19 cents in its second year, Invesco Chief Executive Officer Martin L. Flanagan told investors on a conference call today. Invesco previously forecast a contribution of 13 cents.
The transaction, agreed upon in October and scheduled to close by June 1, includes the Van Kampen funds unit and will add about $123.1 billion to assets. First-quarter earnings more than tripled as rebounding markets boosted client assets and the fees for overseeing them, Invesco said today.
“The transaction is running ahead of schedule and the accretion better than we had thought,” Michael Kim, an analyst with Sandler O’Neill & Partners LP in New York, said in an interview. “The fundamentals are good at Invesco, and there’s going to be a lot of incremental growth related to Van Kampen.”
Net income increased to $95 million, or 21 cents a share, from $30.7 million, or 8 cents, a year earlier, the Atlanta- based company said in a statement. Excluding merger-related expenses, Invesco earned 27 cents a share, compared with the 26- cent estimate of 15 analysts surveyed by Bloomberg.
Kim estimated Invesco would earn 26 cents a share on an adjusted basis.
Stock Market Rebound
Invesco rose 88 cents, or 4.3 percent, to $21.61 as of 4:15 p.m. in New York Stock Exchange composite trading. It has dropped 8 percent since the start of the year.
The firm also halved its forecast for outflows from the Morgan Stanley unit to $5 billion. Invesco’s Chief Financial Loren Starr said today in an interview that the firm was very “conservative” in its earlier projections of the deal’s impact.
Money managers benefited from the 52 percent gain by global stocks, measured by the MSCI AC World Index, in the year ended March 31. Baltimore’s T. Rowe Price Group Inc. said last week first-quarter net income more than tripled to $153 million, and Denver-based Janus Capital Group Inc. reported a profit of $31.3 million, a year after posting a loss.
Franklin Resources Inc., manager of the Franklin and Templeton mutual funds, said today fiscal second-quarter earnings more than tripled on rising stock prices and inflows to the firm’s global investment products. Net income for the period ended March 31 climbed to $356.7 million or $1.55 a share, from $110.8 million, or 47 cents a share, a year earlier, the San Mateo, California-based company said.
Invesco’s assets rose 21 percent from a year earlier to $419.6 billion. Assets were little changed from the previous quarter as investors pulled $10.6 from institutional money funds. The company gathered $1.3 billion into equity funds and $2 billion into bond funds.
Costs related to the takeover reduced net income by $17.2 million in the quarter. Morgan Stanley will receive a 9.4 percent stake in Invesco as part of the deal.