Janus to make first foray into ETFs with VelocityShares purchase

[October 13, 2014]  (Reuters) - Janus Capital Group Inc, fresh from hiring bond star Bill Gross, said on Monday it planned to make its first foray into the booming exchange-traded funds space through the acquisition of VelocityShares parent, VS Holdings Inc.

Janus said the deal to buy VS includes an initial upfront cash consideration of $30 million and is expected to close by the end of the year, subject to regulatory approval.

Exchange-traded product provider VelocityShares, founded in 2009, had raised around $2 billion in assets as of Sept. 30.

The company's ETF business, which is aimed at long-term investors, along with future product innovation, is the planned focus for synergies, the companies said. VelocityShares also has an exchange-traded notes business that is aimed at short-term investors.

There has been speculation for years that Janus would enter the ETF industry after the firm filed an application with regulators in 2010 to offer stock and bond ETFs.
 

"This acquisition positions Janus within the rapidly growing rules-based and active ETF universe, enhancing the customized solutions we can provide to our clients and enabling us to work with the growing segment of financial advisors and institutions focused on these instruments," Janus Chief Executive Richard Weil said in a statement.

VelocityShares managers Nick Cherney, Richard Hoge and Steve Quinn will be joining Janus, the companies said.

They will join Gross, the bond market's most renowned investor, who joined Janus from Pimco late last month, the day before he was expected to be fired from the huge investment firm he co-founded more than 40 years ago. Gross will be managing the $13 million Janus Unconstrained Bond Fund.

Denver-based Janus, which managed around $177.7 billion in assets at the end of June, was advised by Wells Fargo Securities LLC and Paul, Weiss, Rifkind, Wharton & Garrison LLP. VS was advised by Freeman & Co. Securities LLC and Stoel Rives LLP.

(Reporting by John McCrank and Jessica Toonkel in New York; Editing by Stephen Coates)

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