Novato, Calif.-based Hennessy Funds moved closer to finalizing its acquisition of FBR Funds, and transferring the assets into various Hennessy funds, announcing that it had filed its definitive proxy/prospectus materials related to the reorganization with the Securities and Exchange Commission.
The firm now awaits shareholder approval, with the deal expected to close on Oct. 29.
The initial agreement, signed in June, had Hennessy paying $28.7 million for the FBR assets. Once completed, the transaction will give Hennessy total assets under management of more $2.7 billion. In addition, several FBR portfolio managers, including Dave Ellison, FBR president and chief investment officer, will join Hennessy Funds to continue managing the portfolios.
Under the reorganization of the funds, seven of the 10 FBR Funds will be brought under Hennessy’s management but will still employ the same FBR portfolio managers and investment objectives. The six FBR funds that will be re-branded with the Hennessy name are: the Focus Fund; the Gas Utility Index Fund; the Large Cap Financial Fund; the Small Cap Financial; the Technology Fund; and the Core Bond Fund. Another fund, the FBR Balanced Fund, will be rechristened the Hennessy Equity and Income Fund.
The annual expense ratio for each of these seven funds will be the same or slightly lower following the proposed reorganization, according to Hennessy, although ticker symbols and Cusip numbers for these funds will change upon completion of the deal.
The three remaining FBR funds will be transferred into one of the existing Hennessy funds with similar investment objectives. The FBR Large Cap Fund will be transferred into the Hennessy Cornerstone Large Growth Fund; the FBR Mid Cap Fund into the Hennessy Focus 30 Fund (which will be renamed the Hennessy Cornerstone Mid Cap 30 Fund); and the FBR Small Cap Fund into the Hennessy Cornerstone Growth Fund.
The expense ratio of each of these Hennessy funds is lower than that of the transferring FBR fund, the firm said. In addition, the 1% redemption fee currently charged on all FBR funds will be eliminated, because Hennessy Funds do not carry redemption fees.