Acquisitions of fund of hedge fund managers and single- and multi-strategy hedge fund specialists are on the rise, fueled by the strategic needs of large financial institutions to meet growing client demands for alternative investment products, says Putnam Lovell NBF Securities Inc.
The pace of mergers and acquisition activity in the hedge fund area and the level of involvement by large financial institutions have intensified in recent months, according to the New York-based investment bank.
Two transactions have been announced so far this month – the acquisition of International Asset Management by ABN AMRO Asset Management and the purchase of Austin Capital Management by KeyCorp’s investment management arm. Two other deals were announced in December 2005 – Bank of Ireland’s acquisition of a majority interest in Guggenheim Alternative Asset Management, and the sale of a majority interest in Harcourt Investment Consulting to Vontobel Group.
According to Putnam Lovell NBF, an adviser on three of the four most recent deals, twenty transactions involving fund of hedge funds and hedge funds were announced in 2005 and 22 deals in 2004. In total, there were 128 asset management transactions announced in 2005 and 155 in 2004.
“We are seeing an unprecedented level of interest by financial institutions seeking to extend their investment capabilities to the alternatives arena, and especially hedge funds,” said John Griff, president of Putnam Lovell NBF. “Rapid acceptance of hedge fund products as a critical part of a diversified investment portfolio has powered this surge.”