PwC: Brazil, China, India primed for money manager M&A, expansion

Fast-growing economies in Brazil, China and India should provide future M&A or expansion opportunities for money managers, PricewaterhouseCoopers’ partners said Mondayin a webcast on global industry merger-and-acquisition activity.

“If you want to be considered a global business, it’s essential to be in Brazil,” said partner Graham Nye.

He said the rise of the Brazilian middle class will continue for years but warned that managers will find it difficult to enter the market because of the wait, sometimes up to two years, for approval from the Brazilian central bank and government officials.

Brazil has 300 money managers with combined assets under management of $1 trillion, although 17% of those managers control 90% of the assets, Mr. Nye said.

The Chinese money management industry has suffered in recent years because of continued cost pressures, said Michael Phillips, PwC partner. Despite that, he said the industry is highly profitable with positive long-term growth prospects and is one of the fastest growing markets in the world.

But Mr. Phillips said entry barriers for foreign players are high, with restrictions on foreign ownership as well as difficulties in recruiting and retaining skilled and qualified fund managers.

PwC statistics show the total deal value of Asia Pacific money management deals through Aug. 12 of slightly more than $3 billion, compared to almost $7 billion for all of 2011.

He said deal volumes involving Asian money managers have decreased so far in 2012 compared to the previous year, indicating the effect of the European slowdown and sideways markets in Asia.

In India, the mutual fund industry has shown explosive growth in the last seven years, assets were $137 billion as of Aug. 12 compared to $36 billion at the end of 2005, according to PwC partner Samir Sheth. She said the country has a market capitalization of $1 trillion, and has the third largest investor base after the U.S. and Japan.

Ms. Sheth said India offers opportunities because a significant amount of money is held in banks and not invested with mutual funds or money managers.