Manager M&A off to boisterous beginning after big 1st quarter

The first quarter of 2013 was a breakout quarter for money manager mergers and acquisitions activity, with total assets involved in transactions jumping to $599 billion — up more than 250% year over year and more than double the fourth quarter of 2012.

AUM involved was at the highest level since the third quarter of 2009, when BlackRock Inc. purchased Barclays Global Investors from Barclays PLC. The first-quarter 2013 increase was driven by Orix Corp.'s acquisition of Rabobank's Robeco Group and a management purchase of a stake in Investec PLC's Investec Asset Management. Those two transactions involved more than $355 billion in assets.

All information in this analysis of money manager M&A activity is based on transactions reported by Pensions & Investments' global reporting staff.

The 25 deals in the first quarter also represented a significant increase in the number of transactions year over year — there were only six money management deals in the first quarter of 2012 — but were a slight drop from the 26 transactions in the fourth quarter of 2012.

Hedge funds were responsible for seven transactions in the quarter involving $34 billion in assets. Five deals were minority transactions. Of those five, three involved Dyal Capital Partners, a private equity fund focused on hedge funds. To date, Dyal Capital Partners has purchased minority stakes in six hedge fund managers.

Four management teams were involved in transactions. The Investec deal was the largest, in which 40 senior managers and employees acquired 15% of the company, which has more than $100 billion in assets, for $269 million. The employees have the option to purchase another 5% in the coming years.

Of transactions with disclosed values, Orix's acquisition of Robeco was the largest. Orix paid $2.58 billion in cash and stock. MetLife Inc.'s $2 billion purchase of Banco Bilbao Vizcaya Argentaria's AFP Provida, which has $45.3 billion in assets, was the second largest.

Two other transactions topped $500 million: the management buyout of a majority interest in AXA Private Equity from parent AXA Group; and Schroders PLC's purchase of Cazenove Capital Holdings. Both deals were for around $650 million.

Also of note in the quarter was the successful IPO of Artisan Partners Asset Management Inc. Artisan stock was priced at $30, above the expected range of $27 to $29. Artisan finished the quarter at $38.10.