Tue, Mar 19, 2024
A A A
Welcome Guest
Free Trial RSS pod
Get FREE trial access to our award winning publications
Industry Updates

2% more asset management deals so far in 2011 compared to last year, increasing number of mid-market deals expected in 2012

Monday, December 19, 2011
Opalesque Industry Update – Freeman & Co., a leading independent advisor to the financial services industry, released the 23rd edition of its asset management industry overview covering transaction activity and the effects of market volatility and regulatory reform on the asset management sector.

Freeman & Co. reports 82 asset management deals were announced globally in the first three quarters of 2011, a decrease of 2% over the same period in 2010. Full year activity measured by number of transactions is expected to trail 2010 by 10%, while AUM transaction levels in 2011 should exceed 2010 levels by 20%.

Looking forward, banks may continue to shed asset management groups due to regulatory changes, particularly alternative managers, and the need to raise capital due to the European credit crisis.

“This year was driven by a small number of larger AUM strategic deals compared to 2010, when we saw many banks spinning out their alternative product groups. For 2012, we expect to see an increasing number of mid-market deals with particular focus on augmenting international distribution, convergence of alternative asset classes and geographical expansion,” says James Hatchley, Managing Director and COO at Freeman & Co. LLC.

Regulatory changes and the European credit crisis are increasing pressure on many large financial institutions, increasing the likelihood of divestitures of their alternative and traditional asset management units.

In summary, the report details the following

Deal Activity/M&A: Global deal activity decreased through Q3 2011 to 82 deals YTD, a decrease of 2% over the same time period in 2010. In the US, transaction levels are flat with 56 transactions through the third quarter of 2011, down slightly from 57 transactions over the same period last year. European transactions included 32 announced asset management transactions, an increase of 39% over Q3 2010 YTD. Transatlantic activity remains active with 20 announced deals in 2011.

Traditional vs. Alternatives Deals: 2010 marked the first year alternative deals outpaced traditional managers. In 2011, traditional manager deals returned, outpacing alternatives with 46 announced deals vs. 28 announced alternative deals through Q3 2011 YTD.

European Divestitures: European deals increased significantly over the past nine months compared to the past several years. Through Q3 2011, there were 32 European asset management transactions, up 39% over 23 transactions in the first three quarters of 2010. This year’s largest European deals included: Hellman & Friedman’s sale of its minority interest in Mondrian Investment Partners to Mondrian’s management ($70 billion AUM), Carlyle’s purchase of AlpInvest Partners ($43.3 billion AUM) and Gartmore’s purchase of Henderson ($25.8 billion AUM).

Low Volumes: In a typical year, transaction volume can range between $1–2.5 trillion in total transaction AUM. With only $682 billion in transaction volume announced through the third quarter, 2011 is projected to be the second year in a row with sub-trillion dollar AUM transaction volume.

HF & PE Divestiture Activity Among Large Banks: The Volker Rule’s implementation will be a watershed event. However, many firms have taken steps to divest hedge fund and private equity assets well in advance of the rule’s effective date. New spinouts and divestitures will need to reinvent themselves, finding new sources of distribution at a time when market conditions may be less than ideal.

ETF Managers: Perhaps the fastest growing product now, independent ETF providers have historically attracted the attention of sponsors and strategics alike. New entrants face headwinds in launching new products as incumbents benefit from first mover advantage, product placement and scale. Many large firms may need to buy their way into this market as a result. However, to date only a handful of transactions have been completed as most independent firms choose to pursue growth independently.

Press release

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. www.freeman-co.com.

BG

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Previous Opalesque Exclusives                                  
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. KKR raises $6.4bn for the largest pan-Asia infrastructure fund[more]

    Laxman Pai, Opalesque Asia: The New York-based global investment firm KKR has raised a record $6.4bn for its second Asia-focused infrastructure fund, underlining investors' continued appetite for private markets. According to a media release from the alternative assets manager, the figure top

  2. Bucking the trend, top hedge fund makes plans for a second SPAC[more]

    From Institutional Investor: SPACs aren't dead. At least not to the folks at Cormorant Asset Management. The life sciences firm, whose hedge fund topped its peers in 2023, is confident it will match the success of its first blank-check company. Last week, the life sciences and biopharma speciali

  3. Benefit Street Partners closes fifth fund on $4.7 billion[more]

    Bailey McCann, Opalesque New York: Benefit Street Partners has closed its fifth flagship direct lending vehicle, BSP Debt Fund V, with $4.7 billion of investable capital across the strategy. Benefit Street invests primarily in privately originated, floating rate, senior secured loans. The fun

  4. 4 hedge fund themes that are working in 2024[more]

    From The Street: A poor earnings report from Tesla (TSLA) has not hurt the indexes on Thursday. The decline in Tesla stock, which is losing its position in the Magnificent Seven pantheon, is more than offset by strong earnings from IBM (IBM) and ServiceNow (NOW) . In addition, the much higher-t

  5. Opalesque Exclusive: A global macro fund eyes opportunities in bonds[more]

    Bailey McCann, Opalesque New York for New Managers: Munich-based ThirdYear Capital rebounded in 2023, following a tough year for global macro. The firm's flagship ART Global Macro strategy finished the year up 1