Magellan shares jump after fund manager appoints new leader

Shares in Magellan have jumped after the embattled fund manager appointed a new head of its asset management arm to arrest the investor money outflows from the firm, with a view to transition her into the top job.

On Thursday, the former high-flying fund manager said Maple-Brown Abbott chief executive Sophia Rahmani would be joining the firm as managing director of Magellan Asset Management, with the intention to appoint her as chief executive of the group within 12 months of her commencement.

Magellan executive chairman Andrew Formica and new recruit Sophia Rahmani.Credit: Magellan

Magellan executive chairman Andrew Formica, who has previously worked with Rahmani at investment firm Janus Henderson, said she was an exceptionally talented executive and key to attracting talent.

“She really understands the industry, and she’s a great person to work with, incredibly smart, but also a really great communicator and people-person,” he said. “She knows we need to bring in new investment talent, and she’s well known in the industry, so she’ll be instrumental in attracting and bringing on board new teams.”

Rahmani is expected to commence her role in May 2024 with a base salary of $850,000 and a signing-on bonus of $700,000.

Shares in Magellan jumped 5.7 per cent following the announcement.

Magellan has faced multiple departures from senior management over the past few years, including the exit of high-profile stock picker and founder Hamish Douglass in 2022 and chief executive David George late last year. This has seen Magellan’s share price tumble and the company continue to bleed funds as investors pull their money.

The company said the transition plan and Formica’s continued role as executive chairman was aimed at maintaining stability and continuity.

Magellan, which had $115 billion in funds under management in mid-2021, said that number had fallen another $3.9 billion to $35.8 billion as of December.

While the outflow of funds has continued, Formica said the pace of declines was getting “better and slower” on the back of the firm’s stronger investment performance.

Magellan’s flagship global fund returned 3.3 per cent, below its benchmark, in the six months to December, but at the end of January this year exceeded its benchmark, with a 10 per cent return. The company’s net profit fell 5 per cent to $93.5 million in the December half, but its profit excluding one-off costs and strategic expenses jumped 24 per cent to $104.1 million.

Formica, who joined Magellan in 2023 as a non-executive chairman, said his job over the past six months included “getting a bit of urgency” into the decisions that had already been made to turn the company around.

Looking ahead, he said Magellan’s balance sheet, including $800 million in capital, would give Rahmani the flexibility to fund new business strategies of people brought into the company and to buy boutique firms, but that the pathway would be shaped by her.

“Her stamp will definitely be over the deals we do and the areas we move into,” he said.

Having been appointed executive chairman in October last year, Formica will revert to his non-executive chairman role once Rahmani is appointed chief executive.

The company announced an interim dividend of 29.4 cents a share, 50 per cent franked, which is payable on March 6.

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