Including lift-outs and partial deals, investment firms have shelled out more than $50 billion so far this year to acquire mutual fund companies and other asset management firms, in a record 241 deals this year, according to Jefferies Putnam Lovell, a division of Jefferies.
Sales of alternative investment firms account for a majority, 40%, of the deals in the global investment management business thus far in 2008, according to the investment banking firm, which specializes in asset management and financial IT transactions.
"We expect record demand for alternative asset managers to continue throughout 2008, motivated by buyers' search for absolute returns and innovative products in challenging capital markets," said Aaron H. Dorr, managing director of Putnam Lovell and based in New York.
Indeed, today's Wall Street Journal, in a story this morning covering the news issued on May 7, names many of the firms chasing down the deals. They are predominantly cash-rich insurance giants, banks looking to infuse cash into their coffers by shedding their asset management units, or private equity firms attracted by mutual fund companies' large upfront sales loads and annual fees. Some of the funds offered by Phoenix Investment Partners, for example, carry a 5.75% sales load and annual fees of 1.4%.
The asset management industry is also known for high margins ranging in the 17% to, in some cases, particuarly hedge funds, 35%.