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Volumes of asset management M&A on the rise

Transaction volume in the global asset management industry in the first quarter of 2010 declined significantly from 2009, but according to Jefferies’ financial institutions group M&A involving managers of alternative strategies and independent firms is on the rise.

A record level of over 50 per cent of Q1 2010 global asset management transactions involved acquisitions of alternative managers.

In Q1 2009, transactions involving alternative managers represented approximately 25 per cent of the total deal volume, owing to concerns stemming from the turbulent capital markets at the end of 2008 and early part of 2009.

Prominent examples of alternative transactions in Q1 2010 include Affiliated Managers Group’s acquisition of Pantheon Ventures, Religare Enterprises’ acquisition of Northgate Capital, Aberdeen Asset Management’s acquisition of RBS Asset Management’s Investment Strategies fund of funds division, and Shumway Capital Partners’ sale of a minority stake to Goldman Sachs’ Petershill Fund.

"The slack tide of the first quarter’s M&A activity will begin to flow again as improved markets bring both buyers and sellers back to the negotiating table. Alternative asset management businesses continue to be among the most sought after targets based on their expected future growth," says Aaron Dorr, a New York-based managing director within Jefferies’ financial institutions group.

Deal volume in the January to March 2010 period totalled 25, compared with 38 announced transactions in the first quarter of 2009.

Managed assets transacted declined substantially to USD210bn from USD1.1trn a year earlier, which included the USD840bn merger of Credit Agricole Asset Management with Societe Generale Asset Management.

Disclosed deal value climbed to USD1.9bn from USD354m in the first quarter of 2009.

Also on the rise in 2010 are cross-border transactions, which represented 24 per cent of all deals in the first quarter of 2010, up from 11 per cent in the year-earlier period.

While cross-border and alternative transactions are increasing, divestitures – the most prevalent theme in 2009 – are beginning to subside. Divestitures made up 44 per cent of M&A activity in Q1 2010, down from 50 per cent in the year-earlier period and 56 per cent for full-year 2009.

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