Money manager M&A deals totaled 73 in the first half of 2009, down 33% from a year before, reflecting what was arguably the most challenging environment for the industry on record, according to a report today by Jefferies Putnam Lovell.
The bulk of the $13.9 billion in combined deal value and the $2.2 trillion in assets transacted for the six-month period came from the announcement in June that BlackRock would purchase BGI, and its $1.4 trillion in client assets, for $13.5 billion.
Divestitures of asset management subsidiaries by battered banks and insurance companies accounted for 98% of combined deal value and 92% of assets changing hands, according to the report.
Asset managers were the top buyers, trumping private equity firms in an environment dominated by industry consolidation. Management teams were also active buyers, with nine first-half MBOs on pace to exceed the total of 12 MBOs for all of 2008.
Over the coming 12 months, the report predicts a modest pickup in deal activity, with divestitures remaining the leading theme. Even with the market’s strong bounce in recent months, the report predicts banks and insurers will continue to unload non-core asset management operations.
Major U.S. asset managers will remain on the lookout to add scale, possibly by buying European properties, to narrow the rankings gap with BlackRock.