Alternative managers, international and Asian managers and financial technology firms will attract most M&A activity this year, according to a new report from Jeffries Putnam Lovell.
In a slightly subdued market due to fallout from the credit crunch in the US and elsewhere, demand for “;higher growth alternative investments”; will remain solid, the broker and research firm says in a report called ‘All Shook Up’. The firm says 2008 will be “;vibrant”; but unlikely to match 2007’s US$51.2 billion in 241 transactions globally. “;A group of prospective sellers will elect to wait for sunnier markets, and resurrected record profits, before running to the auction block,”; the report says. Buyout firms will continue to shop aggressively in the asset management and financial technology aisles by offering equity-heavy deals. “;Financial technology firms will continue to attract attention from strategic buyers, as exchanges gird themselves for conflict with alternative trading venues, custodians look for the differentiating edge and buy-side firms seek further methods of out-trading a subprime-ravaged sell-side,”; the report says. Alternative asset managers are likely to account for a record proportion of deals in 2008, as long-only managers step up their search for shorting skills. Jeffries Putnam Lovell believes that public markets – there were 11 large IPOs in 2007 – will remain a viable source of liquidity. Multiples paid for quoted managers globally will rebound with a broad market. Cross-border transaction activity will continue to drive a growing proportion of deal activity. “;Asia’s long-term promise remains bright and US asset managers must fulfill their customers’ voracious demand for international securities,”; the report says. The report was written by Ben Phillips, managing director and head of strategic analysis with Jeffries Putnam Lovell.
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