As investment management firms increasingly look to separate the money management and distribution sides of their business, divestiture-driven mergers and acquisitions among such companies could hit a record high this year, Putnam Lovell NBF predicts.
"The proposed BlackRock/Merrill deal and last year's groundbreaking Legg Mason/Citigroup transaction are a wakeup call for the global asset management business," said Benjamin F. Phillips, a managing director at Putnam Lovell. "We anticipate that the number of vertically integrated fund management systems worldwide may now break apart in the near future."
Although divestitures represented 27% of all investment management M&A deals between 2001 and 2005, Putnam Lovell expects that to markedly increase. In addition, the investment bank thinks interest in alternative investment boutiques, especially hedge funds, and overseas expansion will rise. Last year, buyers spent more than $6 billion acquiring $140 billion in alternative assets, up from $84 billion in 2004. North America, Europe and Asia are regions where Putnam Lovell officials expect deals to be made.
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