The fund manager announced last week that it had acquired a minority stake of 29 percent in parent company Vinva Investment Management.

Vinva operates active systematic equity strategies in Australian and global capital markets and manages $22 billion in funds, having been founded in 2010.

This will see it distribute Vinva’s products and investment strategies through its global distribution team as part of an exclusive distribution agreement, excluding Australian institutional clients. The two firms also intend to collaborate on new product initiatives in Australia and globally.

Speaking on a shareholder webinar, Formica said it could see "significant capacity" for Vinva to grow beyond its current $22 billion in assets under management over the next decade.

“There's significant capacity for Vinva, that's a real attraction for us, it could be significantly bigger than where they are today. This is a real highlight of this opportunity for us; the process is so reliable and the capacity constraints are so small. [It’s a] a huge opportunity for us as a business.”

One of the reasons Vinva sought an external partner was to internalize fund management from pension funds. With fewer super fund mandates being allocated these days, this has prompted Vinva to seek wholesale investors, where Magellan already has a large presence.

“The majority of their business is institutional – almost all of it until last year when it started moving into the wholesale market. AUM has fluctuated over the last three or four years, they are exposed to the same trends as any investment manager in the Australian institutional market, particularly as super funds bring their investment management in-house or consolidate.

“I think the trend of Australian institutions or super funds focusing much more on costs than the value created by their managers is a big driver from Vinva's perspective. They recognized that they needed to move away from this distribution channel to the rest of the Australian market and globally.

Having previously acquired Airlie Funds Management in 2018. and a minority stake in Barrenjoey Capital Partners in early 2023, Formica discussed whether the Vinva deal is the start of more corporate activity for the business.

“Given the significant opportunity that Vinva presents, this is our real focus and existing business. If other opportunities come up then we could and should look at them as a board and business, but there's nothing we're focused on or looking at that we feel we need in the business other than what we already have.”

Meanwhile, managing director Sofia Rahmani discussed the progress of the firm's expansion into the US market, which she identified as a key market for growth.

Rahmani, who joined the firm in May from Maple-Brown Abbott, said: "The US market is very broad and deep, so a lot of it depends on how many sales agreements you have and access points to these large broker dealers in the USA.

“There are different ways you can achieve penetration in this market; to build it yourself and we already have some high-quality people in American business or acquiring a business or partnering with one that has access to them. We are open to options on how best to achieve this and are taking some time to evaluate this.”