In the U.S., the three biggest divestitures were to private equity firms. Genworth Financial Inc., Richmond, Va., sold its Genworth Wealth Management to a venture between Aquiline Capital Partners LLC and Genstar Capital LLC for $412 million. SunTrust Banks Inc., Atlanta, divested its RidgeWorth Investments to Lightyear Capital LLC for up to $265 million. Finally, KeyCorp, Cleveland, sold its Victory Capital Management Inc. to Crestview Partners for $246 million.
Private equity firms and managers of private equity funds, many of which are looking to diversify into other alternative assets such as real estate and credit, are making the most out of this current cyclical divestiture spree.
Because acquisition activity in the U.S. is typically single-strategy focused, there was a dearth of interest in multiproduct platforms from strategic buyers in 2013. So in the absence of strategic buyer interest in broad capabilities, private equity firms could step in and be competitive. In the past three years, private equity has become a major buying factor — Cambridge counted 18 transactions globally valued around $2.7 total in 2013 in which private equity was the buyer.
“The strategic activity in the U.S. is mostly around specific products or distribution capabilities and not around multiproduct platforms,” Mr. Temple said. “Strategic acquirers aren't looking for multiple capabilities; they're typically much more focused.”
So, in the absence of strategic-buyer interest, private equity firms can step in and be competitive.
Although divestiture activity exclusively within the U.S. — that is, the selling of one U.S.-based money manager to another U.S.-based firm — was relatively low in 2013, the purchase of non-U.S. companies by U.S. companies went up substantially. A few notable examples include New York-based MetLife Inc. buying Santiago, Chile-based AFP Provida SA; New York-based BlackRock Inc. buying London-based MGPA; The Blackstone Group LP, also New York, acquiring Strategic Partners from Zurich-based Credit Suisse AG; and New York Life Investments buying Dexia Asset Management from Brussels-based Dexia Group.
“U.S. companies are looking to continue globalizing,” Mr. Temple said. “As part of their growth strategy, they're adding products and distribution channels. One of the distribution channels they're looking to add is international.”
In contrast, the investment of non-U.S. companies into the U.S. was down significantly in 2013.
The year saw only four significant M&A transactions in which foreign firms bought U.S. companies: Toronto-based Canadian Imperial Bank of Commerce buying Atlantic Trust Private Wealth Management from Atlanta-based Invesco Ltd.; Aberdeen, Scotland-based Aberdeen Asset Management acquiring New York-based Artio; Paris-based Amundi purchasing Durham, N.C.-based Smith Breeden; and Montreal-based Fiera Capital Corp. taking over Bel Air Investment Advisors LLC as well as its affiliate Bel Air Securities LLC, both Los Angeles.