M&A activity in the global investment management industry in 2006 surpassed previous records for number of transactions, disclosed deal value, and the amount of assets, and a repeat performance is in store in 2007 if capital markets worldwide don’t lose ground, according to investment bank Putnam Lovell NBF Securities Inc.
Led by the two largest asset management acquisitions in investment management history, the number of deals rose to 189 for the 12 months through December 2006, exceeding the previous peak of 159 set in 2004. The amount of assets acquired totaled USD2.646 trillion over that period, almost double the previous record of USD1.377 trillion established in 2000. The disclosed deal value of asset management transactions was USD43.8 billion, compared with USD30.9 billion in 2000, the previous high point for M&A activity in the global asset management business.
By contrast, in 2005, the total number of deals was 143, the amount of assets acquired reached USD1.154 trillion, and the disclosed deal value total totaled USD17.2 billion.
“The strategic catalysts reshaping asset management for the next quarter-century will exert even greater strength during 2007, as fund managers grapple with more onerous product development demands and find themselves buffeted by rapidly changing industry dynamics,” says Ben Phillips, the managing director and Head of Strategic Analysis at Putnam Lovell NBF. “Demands for absolute return solutions will continue to fuel record interest in alternative investment managers of all stripes, and cross-border transactions will grab more headlines in the months ahead.”