Jupiter bosses Andrew Formica and Edward Bonham Carter have loaded up on the high-coupon debt being used to pay for the FTSE 250 firm’s acquisition of Merian Global Investors.
Chief executive Formica (pictured) purchased £300,000 worth of the subordinated issue, which matures in 2030. It has a coupon of 8.875%, although a discounted issue price of £99.038 means the yield will be even higher. Bonham Carter bought £750,000 of the fixed rate callable notes.
The duo will rake in tens of thousands annually from their respective investments.
Willis Owen head of personal investing Adrian Lowcock said the yield was high given current interest rates but reflects the risks for a mid-sized asset manager in the current climate. The issue is expected to have a rating of BBB-, according to Fitch, a notch below the BBB rating for Jupiter due to the subordinated nature of the debt.
“Usually the management buy shares as this means they partake in the long term growth of a business,” Lowcock said. “Buying debt is really a show of faith in the company that they believe it is a viable business, effectively putting their own money alongside other lenders.”
Formica purchased £791,573 worth of shares shortly before he officially took over as chief executive from Maarten Slenderbroek. He took home an £892k bonus for his first 10 months on the job on top of his £422k fixed remuneration package.
Jupiter announced its intention to raise £50m worth of debt when it announced in February it was acquiring Merian. The issuance was intended to provide “increased liquidity and regulatory capital”. The 8.875% coupon was revealed on 22 April.
> See also: Jupiter’s Formica says expect smaller, targeted M&A
