Independent funds management firms are expected to drive M&A activity this year as divestments by large cash-strapped financial institutions taper off from last year’s record level.
According to the latest analysis by Jefferies & Co, a US-based securities house and investment bank, mega-deals drove last year’s activity but this will slow by the middle of the year.
While deal volume declined in 2009, to 143 against 219 in 2008, an all-time high US$4.0 trillion in assets under management changed hands. This was 51 per cent ahead of the total in 2006, the previous record year. By contrast, the 2008 tally was $1.95 trillion in assets transacted. Total disclosed deal value (total of the purchase prices) in 2009 was $24.9 billion, up substantially from the previous year’s $15.9 billion.
The biggest deals for all of 2009, by assets under management, were:
- BlackRock’s purchase of Barclays Global Investors, announced in June 2009 ($1.44 trillion)
- Crédit Agricole Asset Management combining with Société Générale Asset Management to form Amundi Asset Management (to be owned 75 per cent by Crédit Agricole and 25 per cent by Société Générale), announced in January 2009 ($839 billion combined AUM)
- Deutsche Bank’s acquisition of Sal Oppenheim, announced in October 2009 ($201 billion)
- Ameriprise Financial’s acquisition of the long-term asset management business of Bank of America’s Columbia Management, announced in September 2009 ($165 billion)
- Bank of New York Mellon’s purchase of Insight Investment Management from Lloyds Banking Group, announced in August 2009 ($132 billion).
The Jefferies & Co report said: “While 60 per cent of Q4 2009 asset management M&A represented divestitures – the defining theme in the past year – significant strategic deals involving independent firms such as Advisory Research’s sale to Piper Jaffray and Metropolitan West Asset Management’s purchase by TCW will help determine deal-making activity in 2010.
“This would mark a significant change from 2009, when only 61 independently-owned managers changed hands, the lowest level in more than a decade,”
Adrian Dorr, a New York-based managing director of Jefferies & Co, said:‘’We expect divestitures to continue to play out through the first half of 2010 when the urgency of capital raising and strategic realignment of financial institutions should taper off.
“We also anticipate aging owners of independent firms who missed the last bull market to seek to transact in 2010 given improving market conditions, asset flows and pricing.’’