Opalesque Industry Update – Freeman & Co., a leading independent advisor to the financial services industry, released the 22nd edition of its asset management industry overview including data on M&A and deal activity. Freeman & Co. projects that in 2011 alternative deals will continue to outpace traditional managers while total deal size is expected to surpass that of 2010. Based on increasing institutional allocations to alternatives, growing 15% over the past five years, and the significant expansion into retail-oriented alternative products, Freeman & Co. anticipates over 100 alternative transactions again this year. Freeman & Co. reports that in 2010 alternative manager deals outpaced traditional manager deals for the first time. Alternative asset manager deals were up 106% to 101 transactions in 2010 compared to 49 transactions in 2009. In contrast, traditional manager deals totaled 85 transactions in 2010, declining 3% from 88 transactions in 2009. |
“Alternatives continue to be a driver of M&A as institutional investors need products to close their funding gaps and mutual fund sponsors create suitable structures for the mass affluent to access these alterative products. We think these robust trends will continue into 2012 and beyond,” says Eric Weber, Managing Director and COO at Freeman & Co. LLC.
The report reviews current industry trends including the convergence between traditional and alternative asset classes as managers seek new packaging solutions for alternative strategies. Also notable is the increasing number and popularity of independent wealth managers providing high-touch and unique services for asset allocation.
In summary, the report details the following
• Deal Activity/M&A: Deal activity increased in 2010 to 225 transactions, an increase of 35% over 2009. After large transactions in 2009 such as BlackRock’s acquisition of Barclays Global Investors ($1.5 trillion AUM), this year represented a return to normality, as the number of smaller growth-driven acquisitions increased in 2010. Transactions involving alternative firms outpaced traditional managers, a first for the industry.
• Alternative Strategies for Retail Investors: New structures continue to gain market share as alternative strategies are being packaged into UCITS, ETFs and mutual funds. The number of long/short equity mutual funds has grown from 19 to 104 in five years, an estimated 40% CAGR.
• High Net Worth Positioning: A growing core of successful independent firms have emerged that focus on open architecture platforms, providing high-touch or unique services to HNW clientele. These independent firms are an alternative to large, traditional providers and are enjoying significant growth.
• Emerging Markets: A source of increasing deal activity in 2010 and Q1 2011, transactions involving emerging market managers represent a globalizing asset management business. The way forward will be challenging as investor demands may outstrip product capacity.
Founded in 1991, Freeman & Co. LLC is an M&A advisory and strategic consulting firm focused exclusively on the financial services industry with offices in New York and London. The company's advisory services include mergers and acquisitions advice, capital raising, underwriting, fairness opinions, restructuring advice and private company valuations. Strategic consulting assignments are customized to client needs and have covered a wide array of projects. Additionally, Freeman & Co. developed a proprietary algorithm and methodology for benchmarking the competitive position of capital markets businesses, which has become the industry standard used by major investment banks. For more information, visit www.freeman-co.com