Global investment management M&A activity has set a number of records so far this year, "powered by sales of financial conglomerate fund subsidiaries, a pickup in alternative investment deals, and persistent enthusiasm for the asset management industry from financial buyers," according to a news release from Putnam Lovell NBF Securities. The 167 transactions on the board as of Nov. 14 eclipsed the previous record of 159 set in all of 2004, while the $1.414 trillion in assets under management changing hands surpassed the $1.377 trillion racked up in the previous record year of 2000.
This year's torrid M&A activity has included the biggest money management deal on record, BlackRock's $9.6 billion purchase of Merrill Lynch's $544 billion in assets under management in February; the biggest MBO ever, in terms of asset size, as a group of managers joined with private equity firm Hellman & Friedman to buy Gartmore Investment Management's $44.9 billion in European business in May; a record 46 deals involving alternative asset managers; and the largest IPO to date, Ashmore Group's October listing, which netted $560 million.
Ben Phillips, a managing director and head of strategic analysis at Putnam Lovell, said in an interview that cross-border deals aimed at creating global fund organizations were a major driver of the current year's activity. Even when both parties were U.S.-based, such as the BlackRock-Merrill deal, the added global reach that the Merrill operations provided BlackRock "was a key driver," he said.
Mr. Phillips said a huge reservoir of private equity money - roughly $130 billion in the U.S. and Europe today - is increasingly washing into the money management sector, sharply narrowing the traditional discount private equity players have been willing to offer when compared to strategic buyers. Overall, the multiples paid for deals this year remain below those paid at the previous market peak in 2000, one reason the $30.9 billion deal value record set that year remains well above the $20.1 billion so far this year, Mr. Phillips said. Still, a few more sizable deals may still be completed in the coming six weeks, further narrowing that gap, he said.