Asset Management
M&A Deals In Asset Management Sector Hold Steady, Opportunities Beckon - Study
Merger and acquisition activity in the first half of this year held steady but there opportunities ahead, a study concludes.
The first two quarters of the year saw 57 merger and acquisition deals in the asset management sector, with deal volume holding exactly steady compared to the first half of 2011, according to Freeman & Co.
The data was collected before Switzerland's Julius Baer announced it had agreed to buy the non-US wealth management arm of Bank of America Merrill Lynch, a deal that, if approved, boost the former's assets under management by up to 40 per cent.
Measured by AuM, global deal volume was $468 billion in the first half, compared to $1.28 trillion in the full year 2011. However, the firm expects that by the end of the year AuM transaction size should match 2011 levels, or exceed them by up to 10 per cent, the report said.
“Activity has been flat to down year-to-date, with market volatility affecting the speed and timing of transactions. However, the second half of 2012 should be more robust with numerous potential large transactions such as business sales by Dexia and the recently announced sale of TCW by Société Générale,” says Eric Weber, managing director and COO at Freeman & Co.
The French banking group recently agreed to sell US-based asset manager TCW Group to the Carlyle Group and the management of TCW for an undisclosed sum.
Top deal activity in H1 included divestitures, such as Société Générale’s sale of its 37 per cent stake in Rockefeller Financial Services and Morgan Stanley’s sale of Quilter Holdings. The advisory firm expects divestitures by banks and insurance firms to continue to drive deals, as they shore up capital and move away from non-core business lines. It expects this trend to increase in 2013.
The ETF industry has seen assets grow in a trend that shows “no signs of slowing down,” said Freeman & Co. The firm expects ETF compound annual growth to be as high 20 per cent over the next five years, and due to this says that opportunities for entry are plentiful, despite the numerous well-established players.
Another growth area, according to Freeman & Co, is likely to be provided by the search for alternative fixed income products. It cites structured settlements and lottery receivables as two examples of products in this area.
