The pace of mergers and acquisitions in the asset management industry is expected to pick up for the rest of this year both nationally and globally after tumbling in the first quarter.
Deals involving managers of alternative strategies and independent firms in particular are increasing, according to a report released this month by
First-quarter transactions involving managers of alternative strategies included Affiliated Managers Group's deal for Pantheon Ventures, Religare Enterprises' deal for Northgate Capital, Aberdeen Asset Management's deal for RBS Asset Management's Investment Strategies funds-of-funds division and Shumway Capital Partners' sale of a minority stake to Goldman Sachs' Petershill Fund.
"The slack tide of the first quarter's M&A activity will begin to flow again as improved markets bring both buyers and sellers back to the negotiating table," said Aaron Dorr, a managing director within Jefferies' Financial Institutions Group. "Alternative asset management businesses continue to be among the most sought-after targets based on their expected future growth."
Twenty-five global asset management M&A deals were announced in the first quarter, versus 38 a year earlier. Divestitures made up 44% of M&A activity in the first quarter, down from 50% in the first quarter of 2009 and 56% for 2009 as a whole, according to Jefferies.
But
PwC said it expects M&A activity in the U.S. financial services industry to increase in 2010 because of improved fundamentals in the sector and clarity around regulatory reform. M&A for the remainder of 2010 will get a boost from the assistance of the
PwC also expects dealmaking activity to rise over the remainder of 2010. "We believe the current market presents a significant number of potential opportunities in the banking, asset management and insurance sectors for investors that have the liquidity and capital strength to be acquisitive and the infrastructure and capabilities to realize potential synergies," Gary Tillett, financial services leader, transaction services, at PricewaterhouseCoopers, said in a press release.
In the U.S. insurance sector, PwC predicts, activity will remain "muted overall, given the unknown impact of proposed regulatory reform, fewer distressed sellers in the marketplace, and an industry disposition toward rebuilding balance sheets over M&A."