Money manager M&A activity should pick up in 2010, following a year that saw a decline in the total number of deals but a record number of transactions involving large managers, according to a report by the financial institutions group of investment bank Jefferies & Co.
Global M&A transactions involving money management firms came to 146 last year, down from 219 in 2008 and a record 243 in 2007, the report said.
In a year marked by a number of financial conglomerates divesting asset management divisions, a record 11 deals in 2009 involved sales of money managers with more than $75 billion in assets under management, equal to the combined total for the prior two years.
Divestitures will continue to drive deal activity during the first half of 2010, but other trends will assert themselves as the year progresses, the report argued. A growing number of independent money managers, some facing succession issues, will turn to the IPO market this year, after Artio and Gartmore successfully ended an 18-month drought for asset managers going public late last year, the report said.
Also, private equity investors in money management firms, after lying low last year, should begin deploying their “significant stores of capital” this year, the report said. Another reversal: After a quiet year for cross-border activity, growing demand for global product should prompt money managers to look overseas for potential deals, both to build up their global product and global distribution capabilities, the report said.