March 3 (Reuters) - Magellan Financial Group shares soared on Tuesday by their most in nearly two decades, after the Australian fund manager moved to take full control of Barrenjoey Capital Partners in a deal worth A$1.62 billion ($1.15 billion).
The stock jumped as much as 31.3% to A$11.110, its highest since August 20, as trading resumed after a halt on Monday. It closed 21.9% higher in its best day since September 2006 and was the top gainer on the ASX200 benchmark, which fell 1.3%.
"The combined entity has the depth and strength to develop as a genuine investment bank," said Romano Sala Tenna, portfolio manager at Katana Asset Management, which invests in Magellan.
"The team at Barrenjoey possess the requisite experience, drive and expertise to continue to scale up the business."
Magellan said on Monday it would buy all the issued shares of financial services platform Barrenjoey that it does not currently own.
The asset manager, an investor in Barrenjoey since its launch in 2020, currently holds about 36% of economic interest in Barrenjoey, and the remaining shares would have an implied total consideration of A$903 million.
This value excludes the A$148.9 million Magellan will pay Barclays for an additional economic interest of around 10% in Barrenjoey.
Under the deal, Barrenjoey CEO Brian Benari will lead the merged entity.
On Monday, Magellan announced a share placement to raise up to A$130 million at A$8.45 per share to fund the transaction with Barclays. It also announced a non-underwritten share purchase plan aiming to raise A$20 million at the same offer price.
($1 = 1.4061 Australian dollars)
(Reporting by Rajasik Mukherjee; Editing by Subhranshu Sahu)
By Rajasik Mukherjee and Sherin Sunny
