European asset managers eye U.S. acquisitions
LONDON (Reuters) - European asset managers are eyeing U.S. fund houses, seeking to pounce while sellers outnumber buyers, delegates at the Fund Forum in Monaco said this week.
"We are seeing a large number of asset managers up for sale in the U.S. where their owners have taken the view that it is a way of strengthening their balance sheets," said Martin Gilbert, chief executive of Aberdeen Asset Management (ADN.L).
"I expect M&A activity to be pretty intense this year."
Aberdeen is reportedly interested in acquiring Delaware Investments -- with $110 billion in assets -- from Lincoln Financial Group.
Gilbert would not comment, but he did say, though that acquiring a U.S. group is a priority this year.
"We already have a good presence in Europe and Asia but we want to increase our distribution capability in the U.S."
The aim is to target both U.S. institutions and wholesale distributors of mutual funds, he added.
Aberdeen is not the only manager looking for a U.S. bargain. Tom Brown, head of investment management for Europe, Middle East and Africa at KPMG, believes the $13.5 billion BlackRock/BGI deal has "lit the touch paper" and ignited interest in deals.
"Up until now there has been a lot of talk, but this deal should spur some action," he said. He confirmed that a number of European asset managers were looking at the U.S. managers that have been put on the block as banks look to divest asset management units in an effort to raise capital.
"Banks built up big asset management businesses in pursuit of safe, steady profit flow, but they have realised it isn't quite as simple as that," he said.
"The Aberdeens of this world are very hungry to buy up other businesses. I see more cross-border deals."
U.S. mutual fund firms Putnam Investments and Janus Capital (JNS.N) are seen as consolidation players as they are sub-scale. Both have already implemented drastic cost-cutting to get headcount down after large outflows in 2008.
SCEPTICISM
Although most expect an acceleration of M&A, some industry insiders questioned whether this would benefit the investor -- and whether there might be a sting in the tail for some buyers.
"Consolidation is occurring because of a hunt for capital -- but this is not exactly the best premise on which to build an asset management strategy," said Mark McCombe, chief executive of HSBC Global Asset Management (HSBA.L). Continued...
