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Alternative Market Briefing

Anand outlines current state of play in hedge fund merger and acquisition activity

Monday, July 01, 2013

Beverly Chandler, Opalesque London:

Speaking at the London Emerging Manager Forum, Ravi Anand, head of corporate finance at Dexion Capital said that the hedge fund industry has been evolving and changing a great deal over recent years, running in parallel with private equity.

Anand said that the first step in analysing merger and acquisition activity in the hedge fund sector was to estimate how big hedge funds are relative to asset management in general. With the hedge fund industry estimated to have some $2.3tln under management, it is a tiny concentrated part of asset management in general, Anand said. And the concentration means that 5% of funds represent more than 65% of the industry and 9% of funds of funds control more than 33% of the assets.

Reasons why there has been merger and acquisition activity includes funds that are sub-scale and fund management groups on the prowl for alpha and hedge fund skills. Since 2010, Anand told his audience, there have been 80 m&a transactions in hedge funds, against 400 in asset management firms generally. Key drivers, Anand said, are distribution, distress and financial.

Future drivers for m&a activity in hedge funds are regulation and operational scale. "AIFMD is going to affect people’s ability to function going forward" Anand said. Another trend that has appeared in the US is for private equity groups to......................

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