10-Q 1 fhi-20210930.htm 10-Q fhi-20210930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _______________________________________________________________________________________
FORM 10-Q
 _______________________________________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number 001-14818
 _______________________________________________________________________________________
Federated Hermes, Inc.
(Exact name of registrant as specified in its charter)
 _______________________________________________________________________________________
Pennsylvania 25-1111467
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1001 Liberty Avenue 15222-3779
Pittsburgh,
Pennsylvania
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 412-288-1900
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class B common stock, no par valueFHINew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  o.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerx  Accelerated filer
Non-accelerated filer  Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes       No  x
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date: As of October 22, 2021, the Registrant had outstanding 9,000 shares of Class A Common Stock and 96,843,698 shares of Class B Common Stock.

Table of Contents



FORWARD-LOOKING STATEMENTS

Certain statements in this report on Form 10-Q constitute forward-looking statements, which involve known and unknown risks, uncertainties, and other factors that could cause the actual results, levels of activity, performance or achievements of Federated Hermes, Inc. and its consolidated subsidiaries (collectively, Federated Hermes), or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are typically identified by words or phrases such as "trend," "potential," "opportunity," "believe," "expect," "anticipate," "current," "intention," "estimate," "position," "projection," "assume," "continue," "remain," "maintain," "sustain," "seek," "achieve," and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "can," "may," and similar expressions. Among other forward-looking statements, such statements include certain statements relating to, or, as applicable, statements concerning management's assessments, beliefs, expectations, assumptions, judgments, projections or estimates regarding: the coronavirus and pandemic, their impact and status, and plans in response; asset flows, levels, values and mix or their impact; business mix; the level, timing, degree and impact of changes in interest rates or gross or net yields; fee rates and recognition; sources and levels of revenues, expenses, gains, losses, income and earnings; the level and impact of reimbursements, rebates or assumptions of fund-related expenses (Consideration Payable to Customers) and fee waivers for competitive reasons such as to maintain positive or zero net yields (Voluntary Yield-related Fee Waivers), to maintain certain fund expense ratios, to meet regulatory requirements or to meet contractual requirements (collectively, Fee Waivers); whether, under what circumstances and the degree to which Fee Waivers will be implemented; whether and when revenue is recognized; whether performance fees or carried interest will be earned or repaid or clawed-back; whether and when capital contributions could be made; the components and level of, and prospect for, distribution-related expenses; guarantee and indemnification obligations; the timing and nature of payment obligations; acquisition-related matters, including future contingent consideration payments; payment obligations pursuant to incentive compensation arrangements; business and market expansion opportunities, including, anticipated, or acceleration of, global growth; interest and principal payments, expenses and repayment obligations; taxes and the impact of tax law changes; borrowing, debt, future cash needs and principal uses of cash, cash flows and liquidity; the ability to raise additional capital; type, classification and consolidation of investments; uses of treasury stock; Federated Hermes' product and market performance and Federated Hermes' performance indicators; investor preferences; market conditions, product and strategy demand, distribution, development and restructuring initiatives and related planning and timing; the effect, and degree of impact, of changes in customer relationships; legal proceedings; the pace, timing, impact, effects and other consequences of the current regulatory environment, regulatory developments and continuing regulatory oversight by United States (U.S.) and foreign regulators and other authorities; the attractiveness and resiliency of money market funds; dedication of resources; the adoption and impact of accounting policies, new accounting pronouncements and accounting treatment determinations; compliance, and related legal, compliance and other professional services expenses; level and impact of changes in currency exchange rates; interest rate, concentration, market, currency and other risks; and various other items set forth under Item 1A - Risk Factors in Federated Hermes' Annual Report on Form 10-K for the year ended December 31, 2020. Among other risks and uncertainties, market conditions can change



significantly and impact Federated Hermes' business and results, including by changing Federated Hermes' asset flows, levels, and mix, and business mix, which could cause a decline in revenues and net income, result in impairments and increase the amount of Fee Waivers incurred by Federated Hermes. The obligation to make purchase price payments in connection with acquisitions is subject to certain adjustments and conditions, and the obligation to make contingent payments is based on net revenue levels and will be affected by the achievement of such levels. The obligation to make additional payments pursuant to incentive compensation arrangements can be based on satisfaction of certain conditions set forth in those arrangements. Future cash needs, cash flows and uses of cash will be impacted by a variety of factors, including the number and size of any acquisitions, Federated Hermes' success in developing, structuring and distributing its products and strategies, potential changes in assets under management (AUM) and/or changes in the terms of distribution and shareholder services contracts with intermediaries who offer Federated Hermes' products to customers, and potential increased legal, compliance and other professional services expenses stemming from additional or modified regulation or the dedication of such resources to other initiatives. Federated Hermes' risks and uncertainties also include liquidity and credit risks in Federated Hermes' money market funds and revenue risk, which will be affected by yield levels in money market fund products, changes in fair values of AUM, any additional regulatory reforms, investor preferences and confidence, Fee Waivers, and the ability of Federated Hermes to collect fees in connection with the management of such products. Many of these factors could be more likely to occur as a result of continued scrutiny of the mutual fund industry by domestic or foreign regulators, and any disruption in global financial markets. As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and neither Federated Hermes nor any other person assumes responsibility for the accuracy and completeness, or updating, of such statements in the future. For more information on these items and additional risks that could impact the forward-looking statements, see Item 1A - Risk Factors included in Federated Hermes' Annual Report on Form 10-K for the year ended December 31, 2020.


Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
September 30,
2021
December 31,
2020
ASSETS
Current Assets
Cash and Cash Equivalents$201,692 $301,819 
Investments—Consolidated Investment Companies54,075 91,359 
Investments—Affiliates and Other89,318 45,593 
Receivables, net of reserve of $16 and $16, respectively
67,374 64,857 
Receivables—Affiliates31,381 41,107 
Prepaid Expenses27,445 22,130 
Other Current Assets6,757 8,478 
Total Current Assets478,042 575,343 
Long-Term Assets
Goodwill798,258 800,267 
Intangible Assets, net of accumulated amortization of $36,076 and $26,372, respectively
472,920 481,753 
Property and Equipment, net of accumulated depreciation of $110,322 and $106,317, respectively
49,421 52,610 
Right-of-Use Assets, net111,718 122,078 
Other Long-Term Assets36,050 28,788 
Total Long-Term Assets1,468,367 1,485,496 
Total Assets$1,946,409 $2,060,839 
LIABILITIES
Current Liabilities
Accounts Payable and Accrued Expenses$62,648 $61,736 
Accrued Compensation and Benefits133,123 170,646 
Lease Liabilities17,181 15,845 
Other Current Liabilities21,760 17,219 
Total Current Liabilities234,712 265,446 
Long-Term Liabilities
Long-Term Debt102,150 75,000 
Long-Term Deferred Tax Liability, net205,317 187,937 
Long-Term Lease Liabilities109,290 121,922 
Other Long-Term Liabilities34,617 36,550 
Total Long-Term Liabilities451,374 421,409 
Total Liabilities686,086 686,855 
Commitments and Contingencies (Note (15))
TEMPORARY EQUITY
Redeemable Noncontrolling Interest in Subsidiaries55,472 236,987 
PERMANENT EQUITY
Federated Hermes, Inc. Shareholders' Equity
Common Stock:
Class A, No Par Value, 20,000 Shares Authorized, 9,000 Shares Issued and Outstanding
189 189 
Class B, No Par Value, 900,000,000 Shares Authorized, 109,505,456 Shares Issued
441,924 418,669 
Additional Paid-In Capital from Treasury Stock Transactions30 0 
Retained Earnings1,153,539 1,027,699 
Treasury Stock, at Cost, 12,531,058 and 10,174,013 Shares Class B Common Stock, respectively
(403,807)(324,731)
Accumulated Other Comprehensive Income (Loss), net of tax12,976 15,171 
Total Permanent Equity1,204,851 1,136,997 
Total Liabilities, Temporary Equity and Permanent Equity$1,946,409 $2,060,839 
(The accompanying notes are an integral part of these Consolidated Financial Statements.)
4


Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
 2021202020212020
Revenue
Investment Advisory Fees, net—Affiliates$163,806 $202,978 $496,747 $573,242 
Investment Advisory Fees, net—Other66,404 57,111 195,441 172,633 
Administrative Service Fees, net—Affiliates76,853 83,028 228,904 238,960 
Other Service Fees, net—Affiliates15,377 17,952 46,439 87,765 
Other Service Fees, net—Other4,149 3,386 11,271 11,750 
Total Revenue326,589 364,455 978,802 1,084,350 
Operating Expenses
Compensation and Related131,996 126,186 408,385 365,104 
Distribution38,486 73,726 120,990 258,925 
Systems and Communications18,537 16,193 56,086 46,179 
Professional Service Fees14,294 14,006 44,052 41,162 
Office and Occupancy11,036 10,578 33,358 32,539 
Advertising and Promotional4,660 2,921 12,107 10,981 
Travel and Related1,643 542 2,838 4,026 
Other7,535 6,922 23,297 22,058 
Total Operating Expenses228,187 251,074 701,113 780,974 
Operating Income98,402 113,381 277,689 303,376 
Nonoperating Income (Expenses)
Investment Income, net686 770 2,466 3,171 
Gain (Loss) on Securities, net(644)5,852 6,980 3,840 
Debt Expense(476)(494)(1,313)(2,211)
Other, net(1,319)103 (1,158)8,426 
Total Nonoperating Income (Expenses), net(1,753)6,231 6,975 13,226 
Income Before Income Taxes96,649 119,612 284,664 316,602 
Income Tax Provision23,163 32,928 83,353 81,852 
Net Income Including the Noncontrolling Interests in Subsidiaries73,486 86,684 201,311 234,750 
Less: Net Income (Loss) Attributable to the Noncontrolling Interests in Subsidiaries2,124 862 (419)3,554 
Net Income$71,362 $85,822 $201,730 $231,196 
Amounts Attributable to Federated Hermes, Inc.
Earnings Per Common Share—Basic$0.73 $0.86 $2.05 $2.30 
Earnings Per Common Share—Diluted$0.73 $0.85 $2.04 $2.29 
Cash Dividends Per Share$0.27 $0.27 $0.81 $0.81 
(The accompanying notes are an integral part of these Consolidated Financial Statements.)

5


Consolidated Statements of Comprehensive Income
(dollars in thousands)
(unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
 2021202020212020
Net Income Including the Noncontrolling Interests in Subsidiaries$73,486 $86,684 $201,311 $234,750 
Other Comprehensive Income (Loss), net of tax
Permanent Equity
Foreign Currency Translation Gain (Loss)(7,248)16,239 (2,195)(9,333)
Temporary Equity
Foreign Currency Translation Gain (Loss)(9,953)7,316 (7,655)(4,573)
Other Comprehensive Income (Loss), net of tax(17,201)23,555 (9,850)(13,906)
Comprehensive Income Including the Noncontrolling Interests in Subsidiaries56,285 110,239 191,461 220,844 
Less: Comprehensive Income (Loss) Attributable to Redeemable Noncontrolling Interest in Subsidiaries(7,829)8,178 (8,074)(1,019)
Comprehensive Income Attributable to Federated Hermes, Inc.$64,114 $102,061 $199,535 $221,863 
(The accompanying notes are an integral part of these Consolidated Financial Statements.)


6


Consolidated Statements of Changes in Equity
(dollars in thousands)
(unaudited)
 Federated Hermes, Inc. Shareholders' Equity  
 Common
Stock
Additional
Paid-in
Capital from
Treasury
Stock
Transactions
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive Income (Loss), net of
tax
Total
Permanent
Equity
Redeemable
Noncontrolling
Interest in
Subsidiaries/
Temporary
Equity
Balance at December 31, 2020$418,858 $0 $1,027,699 $(324,731)$15,171 $1,136,997 $236,987 
Net Income (Loss)74,484 74,484 (138)
Other Comprehensive Income (Loss), net of tax3,558 3,558 1,430 
Subscriptions—Redeemable Noncontrolling Interest Holders25,762 
Consolidation (Deconsolidation)(16,237)
Stock Award Activity9,216 (15,234)15,249 9,231 2,481 
Dividends Declared(26,788)(26,788)
Distributions to Noncontrolling Interest in Subsidiaries(1,898)
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests02,670 2,670 (2,670)
Purchase of Treasury Stock(45,030)(45,030)
Balance at March 31, 2021$428,074 $0 $1,062,831 $(354,512)$18,729 $1,155,122 $245,717 
Net Income (Loss)55,884 55,884 (2,405)
Other Comprehensive Income (Loss), net of tax1,495 1,495 868 
Subscriptions—Redeemable Noncontrolling Interest Holders899,962 
Consolidation (Deconsolidation)(894,175)
Stock Award Activity7,760 (189)205 7,776 2,518 
Dividends Declared(26,550)(26,550)
Distributions to Noncontrolling Interest in Subsidiaries(1,016)
Purchase of Treasury Stock(31,797)(31,797)
Balance at June 30, 2021$435,834 $0 $1,091,976 $(386,104)$20,224 $1,161,930 $251,469 
Net Income (Loss)71,362 71,362 2,124 
Other Comprehensive Income (Loss), net of tax(7,248)(7,248)(9,953)
Subscriptions—Redeemable Noncontrolling Interest Holders66,903 
Consolidation (Deconsolidation)(74,836)
Stock Award Activity6,279 30 6,309 2,557 
Dividends Declared(26,301)(26,301)
Distributions to Noncontrolling Interest in Subsidiaries(1,178)
Acquisition of Additional Equity of HFML(165,112)
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests16,502 16,502 (16,502)
Purchase of Treasury Stock(17,703)(17,703)
Balance at September 30, 2021$442,113 $30 $1,153,539 $(403,807)$12,976 $1,204,851 $55,472 
(The accompanying notes are an integral part of these Consolidated Financial Statements.)
Consolidated Statements of Changes in Equity
(dollars in thousands)
(unaudited)
 Federated Hermes, Inc. Shareholders' Equity  
 Common
Stock
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive Income (Loss), net of
tax
Total
Permanent
Equity
Redeemable
Noncontrolling
Interest in
Subsidiaries/
Temporary
Equity
Balance at December 31, 2019$392,210 $930,351 $(281,032)$(249)$1,041,280 $212,086 
Net Income (Loss)64,178 64,178 (913)
Other Comprehensive Income (Loss), net of tax(24,859)(24,859)(11,454)
Subscriptions—Redeemable Noncontrolling Interest Holders5,577 
Consolidation (Deconsolidation)(4,019)
Stock Award Activity7,467 (16,146)16,146 7,467 2,153 
Dividends Declared(27,304)(27,304)
Distributions to Noncontrolling Interest in Subsidiaries(6,039)
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests(1,870)(1,870)1,870 
Purchase of Treasury Stock(15,959)(15,959)
Balance at March 31, 2020$399,677 $949,209 $(280,845)$(25,108)$1,042,933 $199,261 
Net Income (Loss)081,196 0081,1963,605 
Other Comprehensive Income (Loss), net of tax000(713)(713)(435)
Subscriptions—Redeemable Noncontrolling Interest Holders000006,225 
Stock Award Activity6,456 (678)829 06,6072,087 
Dividends Declared0(27,243)00(27,243)
Distributions to Noncontrolling Interest in Subsidiaries000(4,058)
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests2,013 2,013(2,013)
Purchase of Treasury Stock00(18,126)0(18,126)
Balance at June 30, 2020$406,133 $1,004,497 $(298,142)$(25,821)$1,086,667 $204,672 
Net Income (Loss)85,822 85,822 862 
Other Comprehensive Income (Loss), net of tax16,239 16,239 7,316 
Subscriptions—Redeemable Noncontrolling Interest Holders3,212 
Stock Award Activity6,281 67 6,348 2,164 
Dividends Declared(27,044)(27,044)
Distributions to Noncontrolling Interest in Subsidiaries(358)
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests3,567 3,567 (3,567)
Purchase of Treasury Stock(20,023)(20,023)
Balance at September 30, 2020$412,414 $1,066,842 $(318,098)$(9,582)$1,151,576 $214,301 

7


Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Nine Months Ended
September 30,
20212020
Operating Activities
Net Income Including the Noncontrolling Interests in Subsidiaries$201,311 $234,750 
Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities
Depreciation and Amortization22,639 22,431 
Share-Based Compensation Expense23,283 20,224 
Subsidiary Share-Based Compensation Expense7,556 6,404 
(Gain) Loss on Disposal of Assets(6,975)1,590 
Provision (Benefit) for Deferred Income Taxes19,495 11,907 
Consolidation/(Deconsolidation) of Other Entities10,379 (3,051)
Net Unrealized (Gain) Loss on Investments27 (5,397)
Net Sales (Purchases) of Investments—Consolidated Investment Companies(129,647)(7,516)
Other Changes in Assets and Liabilities:
(Increase) Decrease in Receivables, net3,914 5,998 
(Increase) Decrease in Prepaid Expenses and Other Assets3,887 (9,317)
Increase (Decrease) in Accounts Payable and Accrued Expenses(36,769)(27,411)
Increase (Decrease) in Other Liabilities(18,144)(7,154)
Net Cash Provided (Used) by Operating Activities100,956 243,458 
Investing Activities
Purchases of Investments—Affiliates and Other(7,221)(19,050)
Cash Paid for Business Acquisitions, Net of Cash Acquired(5,324)2,697 
Proceeds from Redemptions of Investments—Affiliates and Other33,291 6,415 
Cash Paid for Property and Equipment(7,753)(8,559)
Net Cash Provided (Used) by Investing Activities12,993 (18,497)
Financing Activities
Dividends Paid(79,668)(81,612)
Purchases of Treasury Stock(92,426)(53,145)
Distributions to Noncontrolling Interest in Subsidiaries(4,092)(10,455)
Contributions from Noncontrolling Interest in Subsidiaries101,297 15,014 
Payments to Acquire Additional Equity in HFML(163,696)0 
Proceeds from New Borrowings82,150 100,000 
Payments on Debt(55,000)(110,000)
Other Financing Activities(1,948)(1,616)
Net Cash Provided (Used) by Financing Activities(213,383)(141,814)
Effect of Exchange Rates on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents(2,758)(3,408)
Net Increase (Decrease) in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents(102,192)79,739 
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Beginning of Period308,635 249,511 
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, End of Period206,443 329,250 
Less: Restricted Cash Recorded in Other Current Assets4,449 6,091 
Less: Restricted Cash and Restricted Cash Equivalents Recorded in Other Long-Term Assets302 312 
Cash and Cash Equivalents$201,692 $322,847 
(The accompanying notes are an integral part of these Consolidated Financial Statements.)
8

Notes to the Consolidated Financial Statements
(unaudited)

(1) Basis of Presentation
Federated Hermes, Inc. and its consolidated subsidiaries (collectively, Federated Hermes) provide investment advisory, administrative, distribution and other services to various investment products, including sponsored investment companies, collective funds and other funds (Federated Hermes Funds) and Separate Accounts (which include separately managed accounts, institutional accounts, certain sub-advised funds and other managed products) in both domestic and international markets. In addition, Federated Hermes markets and provides stewardship and real estate development services to various domestic and international companies. The interim Consolidated Financial Statements of Federated Hermes included herein have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In the opinion of management, the financial statements reflect all adjustments that are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods presented.
In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the Consolidated Financial Statements.
These financial statements should be read in conjunction with Federated Hermes' Annual Report on Form 10-K for the year ended December 31, 2020. Certain items reported in previous periods have been reclassified to conform to the current period's presentation.
(2) Significant Accounting Policies
For a listing of Federated Hermes' significant accounting policies, please refer to Federated Hermes' Annual Report on Form 10-K for the year ended December 31, 2020. The following accounting policy has been updated as a result of newly consolidated variable interest entities (VIEs).
Consolidation of Variable Interest Entities
Federated Hermes has a controlling financial interest in a VIE and is, therefore, deemed to be the primary beneficiary of a VIE if it has (1) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Financial information for certain entities, whose primary purpose is to collect and distribute carried interest paid by foreign private equity and infrastructure funds, is not available timely and is therefore consolidated on a one quarter lag, adjusted for any known material carried interest revenue and compensation transactions occurring through the balance sheet date.
(3) Equity Acquisition and Business Combination
2021 Acquisition of HFML Noncontrolling Interest
On August 31, 2021 (Closing Date), Federated Hermes completed the acquisition of a 29.5% noncontrolling interest in Hermes Fund Managers Limited (HFML) from BT Pension Scheme (BTPS) for £116.5 million ($160.2 million) pursuant to the terms of a certain Put and Call Option Deed, dated July 2, 2018 (the Option Deed), between BTPS and Federated Hermes (2021 Acquisition of HFML Noncontrolling Interest). Because Federated Hermes had previously acquired a 60% controlling interest in HFML from BTPS as of July 1, 2018 (2018 HFML Acquisition), the 2021 Acquisition of HFML Noncontrolling Interest was accounted for as an acquisition of additional equity. The difference between the carrying value of the BTPS noncontrolling interest and the purchase price was reclassified from temporary equity to permanent equity. The remaining approximate 10% of the equity interests of HFML is held in an employee benefit trust for the benefit of certain members of HFML's management and other key employees under a long-term incentive plan established in connection with the 2018 HFML Acquisition.
Pursuant to the Option Deed, Federated Hermes and BTPS agreed upon a third-party valuation company, which determined the fair value of HFML for purposes of the Option Deed. The Option Deed provided that the consideration to be paid for BTPS' remaining interest in HFML would be based on BTPS' equity proportion of the fair value of HFML as determined in accordance with the terms of the Option Deed. Federated Hermes paid the purchase price by using a combination of cash on hand and borrowings under its corporate credit facility. Upon completion of the acquisition on the Closing Date, BTPS no longer has any ownership interest in HFML nor any representation on HFML's board of directors.
9

Notes to the Consolidated Financial Statements
(unaudited)
HCL Acquisition
On March 5, 2020, Federated Hermes acquired, effective as of March 1, 2020, 100 percent ownership of HGPE Capital Limited (HCL Acquisition) for £15.9 million ($20.4 million). The principal activity of HGPE Capital Limited is that of a holding company for an infrastructure and private equity investment management business. As a result of the HCL Acquisition, Federated Hermes gained control of Hermes GPE LLP (HGPE) (collectively with HGPE Capital Limited, HCL). The addition of London-based HCL provides the opportunity to further accelerate and broaden Federated Hermes' global growth.
The HCL Acquisition included upfront cash payments that totaled £11.2 million ($14.3 million). The transaction also includes contingent purchase price payments payable through December 2024 that were deposited into escrow. The maximum contingent purchase price payments, recorded in Other Long-Term Liabilities, totaled £3.5 million ($4.5 million as of March 1, 2020), which represents the payment of certain future carried interest.
Prior to March 1, 2020, Federated Hermes accounted for its partial ownership interest in HGPE (through its ownership of HFML) as an equity-method investment recorded in Other Long-Term Assets on the Consolidated Balance Sheets. Management used an independent valuation expert to assist in estimating the fair value of this equity interest in HGPE using primarily the discounted cash flow methodology under the income approach. The acquisition-date fair value of this previous equity interest was $34.5 million. In the first quarter 2020, Federated Hermes recognized a gain of $7.5 million as a result of remeasuring the prior equity interest in HGPE held before the business combination and the consolidation of HGPE. This gain is included in Nonoperating Income (Expenses) - Other, net on the Consolidated Statements of Income.
Federated Hermes performed a valuation of the fair market value of acquired assets and assumed liabilities of the HCL Acquisition. The accounting for this acquisition was finalized in the first quarter 2021. During the first quarter 2021, Federated Hermes recorded adjustments that primarily resulted from the consolidation of certain foreign subsidiaries not previously consolidated. The provisional amounts recognized for certain acquired assets and incurred liabilities were adjusted by $25.8 million and $17.2 million, respectively, with the net offset of $8.6 million recorded to the related redeemable noncontrolling interest in subsidiary. This adjustment reflected facts and circumstances that existed as of the acquisition date. As a result of the consolidation of these subsidiaries, Federated Hermes recorded revenue of $6.9 million offset by $6.9 million of Compensation and Related expense, which represented the income and expense that would have been recorded had these entities been consolidated on March 1, 2020. There was no change to net income or earnings per share for the three-month period ended March 31, 2021 as a result of these adjustments.
The following table summarizes the final purchase price allocation determined as of the purchase date:
(in millions)
Cash and Cash Equivalents $32.7 
Other Current Assets1
11.8 
Goodwill2
19.1 
Intangible Assets3
27.6 
Other Long-Term Assets16.4 
Less: Liabilities Acquired(44.1)
Less: Fair Value of Redeemable Noncontrolling Interest in Subsidiary4
(43.1)
Total Purchase Price Consideration$20.4 
1    Includes $5.0 million of accounts receivable.
2    The goodwill recognized is attributable to enhanced revenue and AUM growth opportunities from future investors and the assembled workforce of HGPE. In this instance, goodwill is not deductible for tax purposes.
3    Includes $20.3 million for rights to manage fund assets for private equity funds with a weighted-average useful life of 9.0 years and $6.9 million for rights to manage fund assets for infrastructure funds with a weighted-average useful life of 11.0 years, all of which are recorded in Intangible Assets, net on the Consolidated Balance Sheets.
4    The fair value of the noncontrolling interest was determined utilizing primarily the discounted cash flow methodology under the income approach.
10

Notes to the Consolidated Financial Statements
(unaudited)
(4) Revenue from Contracts with Customers
The following table presents Federated Hermes' revenue disaggregated by asset class:
Three Months EndedNine Months Ended
September 30,September 30,
(in thousands)2021202020212020
Equity$172,349 $138,590 $510,302 $399,208 
Fixed-income60,622 49,407 175,115 139,705 
Money market55,726 143,391 185,704 452,240 
Other1
37,892 33,067 107,681 93,197 
Total Revenue$326,589 $364,455 $978,802 $1,084,350 
1    Primarily includes Alternative / Private Markets (including but not limited to private equity, real estate and infrastructure), multi-asset and stewardship services revenue.
The following table presents Federated Hermes' revenue disaggregated by performance obligation:
Three Months EndedNine Months Ended
September 30,September 30,
(in thousands)2021202020212020
Asset Management1