As part of a broad strategy aimed at consistently returning capital to investors, Affiliated Managers Group Inc. Chairman and CEO Sean Healey unveiled a new capital policy for the asset manager centered around the initiation of a quarterly dividend.
Describing the initiation as a natural evolution for the company, Healey told analysts during a 2016 fourth-quarter earnings conference call that the dividend is set at a level that will not impact its financial flexibility. Healey expects the initial quarterly dividend of 20 cents per common share to increase regularly, as the company's earnings grow on a consistent basis.
"We always knew that this was a step we would take," Healey said.
At the same time, CFO Jay Horgen noted that Affiliated Managers Group is replacing its existing model for share buybacks, shifting to one which will only include known or anticipated repurchases. For 2017, Affiliated Managers Group expects to calculate a weighted-average share count of 56.4 million, including anticipated share repurchases of $200 million over the first half of the year.
Prior to the announcement, Affiliated Managers Group remained one of the only public asset management companies in the world that did not offer a dividend, according to Horgen. Including the dividend and anticipated share repurchases, Horgen said the company will have approximately $600 million of cash that is not included in its guidance. Affiliated Managers Group intends to use the free cash flow to pursue opportunities through accretive investments in new affiliates, Healey added.
Healey said Affiliated Managers Group experienced $4.1 billion in outflows in the fourth quarter of 2016, amid seasonal client redemptions and realization activity in private equity. Despite suffering $4.5 billion in outflows from its mutual fund channel, Affiliated Managers Group's flow trends were not as bad as the quarterly results suggest, Jefferies analyst Daniel Fannon said in a research note.