Ann: Partnership with Paradice Investment Management - Pres, page-4

I'd say the market didn't like it, as the market cap dropped by more than $500m: more than twice the cost of the transaction (i.e., $207m).

CHC has a winning formula: increase AUM by buying more and more real-estate assets (through the funds they manage) and for which there is no obvious benchmark with which retail/institutional investors can compare performance.

With this transaction, they are moving away from their winning formula, i.e., into easily replicable active fund management that has to beat an index in order to impress the fund investors (to prevent fund withdrawals). Almost invariably, these managers begin to underperform the market. CHC would be ruing the recent dramas at Magellan (from a timing perspective). That's the other problem with active fund management: key person risk. Remember Hunter Hall? Also, look at the performance of ASX.PMC.

My hunch is that the executives at CHC are getting bored with the implementation of their winning strategy. Correspondingly, they also probably look-up to Blackrock and want to compete at that level. However, Blackrock has a massive ETF portfolio (iShares). Yes, they also do a fair amount of active fund management, but I wonder how much of that has proven as profitable as the unlisted real asset management and the ETFs?