Asset management merger and acquisition transactions globally were flat in 2016, with 149 deals compared to 148 in the previous year, but deal value in 2016 reached $17.1 billion, a “whopping” 82% increase year over year, said a report by Sandler O'Neill & Partners.
The increase was led by “four marquee deals that were all valued at more than $1 billion,” according to the report.
They were the $3.7 billion purchase by Amundi Group of UniCredit's Pioneer Investments; the $2.6 billion merger between Henderson Group and Janus Capital Group; BTG Pactual's $1.3 billion sale of its BSI subsidiary to EFG International; and the $1.3 billion purchase by a group of investors to take ARA Asset Management private.
“Tactical dealmaking continued to outpace large transformational deals,” the report noted.
The report found 64 acquisitions of asset management businesses with assets under management between $1 billion and $10 billion in 2016.
“Midsized managers with specialist capabilities were most favored as buyers looking to address specific holes in their product lineups,” the report said. “The most in-demand capabilities included traditional global/international equities and income strategies, which have faced fewer headwinds than domestic strategies in recent years from the reallocation to passive strategies.”
The report also said that the sale of institutional managers reached its highest level in seven years, totaling 23 transactions.
“Were it not for the challenge of merging or replacing investment teams in the institutional market, significantly more deals in the institutional sector would likely have occurred,” it said.
The report also said the equity market's strength globally following the U.S. presidential election will likely push deals already in progress “across the goal line.”
“That said,” the report went on, “we expect buyers and sellers will proceed cautiously in the new year as they look for greater clarity on the Trump administration's impact on financial regulation, taxation and the global economy.”