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Affiliated Managers (AMG) Completes Partnership With Parnassus

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Affiliated Managers Group AMG has completed its partnership with Parnassus Investments, one of the largest sustainable investing fund managers in the United States. In July 2021, Affiliated Managers announced that it would acquire a majority equity stake in Parnassus. However, the terms of the deal were not disclosed.

Benjamin E. Allen and Todd Ahlsten, the CEO and CIO of Parnassus, have entered into long-term employment agreements with the firm.

Based in San Francisco, Parnassus mixes fundamental, and environmental, social and governance (ESG) research to achieve robust risk-adjusted returns for clients. With more than 35 years of experience in responsible investing, the firm has almost $49 billion of assets under management (AUM).

With the addition of Parnassus, Affiliated Managers’ ESG-focused AUM balance is expected to increase to $80 billion.

At the time of the deal announcement, it was estimated that the transaction would contribute $70 million to Affiliated Managers’ adjusted earnings before interest, taxes, depreciation and amortization as well as $1.30 to economic earnings per share in 2022.

Our Take

At present, ESG investing is in vogue. The pandemic has shifted investors’ interest toward the companies that perform well on ESG targets.

Notably, ESG investing is one of the fastest-growing segments in the investment management industry. ESG-focused funds have attracted huge investments across the globe in recent times.

Affiliated Managers’ other investments in sustainable investing fund managers are interests in Boston Common Partners and Inclusive Capital Partners. Backed by these and other similar investments, the company is expected to continue generating meaningful growth over time. Further, rising demand for equity and alternative strategies among institutional clients is expected to keep supporting its profitability.

So far this year, shares of Affiliated Managers have gained 47.1%, outperforming 22.7% growth recorded by the industry.

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Currently, Affiliated Managers carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Finance Companies Taking Similar Steps

Many finance companies have started to come ahead and participate in ESG investing over the past couple of years. In June 2021, BlackRock BLK announced a deal to acquire the Climate Change Scenario Model of Baringa Partners and integrate the same into its Aladdin risk management system. Likewise, JPMorgan JPM inked a deal to acquire San Francisco-based start-up, OpenInvest, which provides ESG investment management products.

In November 2020, Moody’s MCO acquired a minority stake in MioTech as part of its efforts to offer innovative ESG and know-your-customer solutions to the financial markets of China. Also, in 2019, it acquired a majority stake in VigeoEiris, a global leader in ESG research, data and assessments.


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