Hennessy Advisors has completed its acquisition of FBR  Funds today as planned. The acquisition brings the Novato-Calif.-based company's total AUM to $3.1 billion, $0.4 million over the $2.7 billion in AUM the firm had originally expected to achieve.

This is the first time Hennessy Advisors has acquired a multi-billion dollar fund family, said Neil Hennessy, chief executive of Hennessy Advisors. He added that his firm will continue "actively looking" for more acquisitions in the mutual fund space.

"When the opportunity arose for us to have a chance at bidding on the FBR funds, we obviously jumped on it simply because the way we've tried to grow Hennessy Advisors in two ways: organic growth and acquisitions," Hennessy said. "Now people know we can acquire 2, 3, or 4 billion dollars in assets and we should hopefully see more deals coming our way in the future whether we win them or don't."

"I think everything's in place as a company to continue to grow organically and through acquisitions."

Hennessy's mutual fund lineup now includes 16 funds and 11 institutional funds.

While an initial agreement signed in June had Hennessy paying $28.7 million for 10 FBR funds, an increase in assets from $1.8 billion to $2.2 billion raised the buying price to $33 million, according to Hennessy. Money Management Executive also previously reported that Hennessy would be bringing on several FBR portfolio managers, including FBR President and Chief Investment Officer Dave Ellison, on board to continue managing the portfolios.

Seven of the FBR funds will retain their investment objectives and their current portfolio managers. These include the Focus Fund (new ticker: HFCSX; new Cusip number: 425 88P 700); the Gas Utility Index Fund (new ticker: GASFX; new Cusip number: 425 88P 833); the Large Cap Financial Fund (new ticker: HLFNX; new Cusip number: 425 88P 882); the Small Cap Financial Fund (new ticker: HSFNX; new Cusip number: 425 88P 874); the Technology Fund (new ticker: HTECX; new Cusip number: 425 88P 858); and the Core Bond Fund (new ticker: HCBFX; new Cusip number: 425 88P 791). The FBR Balanced Fund has also been rebranded the Hennessy Equity and Income Fund (ticker: HEIFX; Cusip number: 425 88P 825).

Hennessy will be subadvising on the Focus Fund to its three portfolio managers, who have since left FBR to open their own shop. Meanwhile, Skip Aylesworth will manage continue managing the Gas Utility Index Fund, while Ellison will handle the two Financial funds and the Technology Fund.

Annual expense ratios for the seven funds will be the same or slightly lower following the proposed reorganization.

Three other FBR Funds will be transferred into existing Hennessy Funds with similar investment objectives. Hennessy will utilize subadvisors for the funds, which include FBR Large Cap Fund, which has been absorbed into Hennessy Cornerstone Large Growth Fund; FBR Mid Cap Fund into Hennessy Focus 30 Fund; and FBR Small Cap Fund into Hennessy Cornerstone Growth Fund.

These funds' expense ratios will be lower as Hennessy funds. The 1% redemption fee currently charged on the FBR funds will be eliminated, as Hennessy Funds do not carry redemption fees.

Hennessy has also brought on four distribution, two trading, and one compliance officer from FBR.

"For investors, the continuity is all there," Hennessy said. "It's all the same portfolio managers except for the three merged funds, the same auditors, the same trust company. They shouldn't see any change in way money's being managed."

In other news, Hennessy Advisors' fiscal year results will be released tomorrow.

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