Amvescap PLC announced Monday that it had agreed to buy PowerShares Capital Management LLC, an Illinois provider of exchange-traded funds, for $60 million, plus earn-out provisions that could add up to $670 million after five years.
PowerShares in Wheaton, Ill., manages more than $3.5 billion of assets in a family of 36 ETF portfolios.
Amvescap, a London-based company that manages the AIM Investments mutual funds, said it expects the deal to close in the second or third quarter and to be neutral to slightly accretive to earnings this year. AIM is expected to provide distribution for the PowerShares ETFs once regulatory requirements are met.
About $294 billion of ETF assets were under management in the United States at Dec. 31, according to the Investment Company Institute.
The deal agreement provides, in addition to the $60 million payment at closing, for a $40 million cash payment when management fees reach $17.5 million at an annual rate in any 30-day period and $130 million to be paid when such fees total $50 million for any consecutive 12 months in years one through four of the agreement. Finally, for a compound annual growth rate in year five of 15% to 75%, $5 million is to be paid for each percentage point above 15% and $8 million for every percentage point from 75% to 100% - a potential total of $500 million.
