Asset management M&A set to rise
Asset management takeover activity will recover from a dismal first half by increasing over the rest of the year and into 2010, according to new research, as private equity firms and cash-rich fund managers gain confidence amid rising markets.
Robert Lee and Larry Hedden, analysts at investment banking boutique Keefe, Bruyette & Woods, said that because capital markets have stabilised, and fund houses' assets have rebounded since the market upswing in March, "we expect M&A activity to pick up over the balance of the year and into 2010".
Asset management companies have become more confident, Lee and Hedden said, meaning more would consider buying or selling. They added: "We believe that many private equity firms are very interested in acquiring asset managers".
The research comes after M&A activity declined dramatically across the funds industry in the first half of the year.
The total deal value of asset management transactions in the first half of the year, excluding the BlackRock/BGI megadeal, plunged 92% from $7.7bn (€5.4bn) in the first half last year to $600m this year, according to a report last month from Jefferies Putnam Lovell, another investment banking boutique that tracks M&A activity in the sector. Including the $13.5bn acquisition of BGI, total deal value rose to $14.1bn.
Lee and Hedden named 10 asset managers listed in the US who have expressed a continued interest in acquisitions: Invesco, BlackRock, Bank of New York Mellon, Franklin Resources, Legg Mason, Affiliated Managers Group, Federated Investors, Blackstone, Fortress, and GLG Partners.
They also listed potential targets for acquisition "over the longer term", namely Morgan Stanley Asset Management, Janus Capital, Calamos, Pzena and Waddell & Reed. Janus declined to comment and Morgan Stanley did not respond to calls for comment. Calamos, Pzena and Waddell & Reed could not be contacted for comment in time for this article.
The comments came in a report published this morning, and after Financial News revealed that Indian conglomerate Religare Enterprises has become the frontrunner to buy US-based AIG Investments, which manages $85bn of assets.
-- Write to Phil Craig at pcraig@efinancialnews.com
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