Consolidation of key players in asset management
The asset management industry is experiencing a wave of consolidation. bringing together complementary products and services to form more powerful entities. This trend has been driven by several factors including increased competition and technology advancements. Asset managers who can't adapt may see their business models disrupted entirely or even fail altogether
- Global consolidation
It is a new trend in asset management, as the industry consolidates across geographies and investment styles. In 2016, BlackRock acquired two private equity firms - First Reserve and PDT Partners - to enter into this space and arguably started a trend of looking at neighbours as potential seed pods for rapid growth. The near-constant stream of mergers and acquisitions across both the sell- and buy-side appears to show no signs of abating as two asset management deals have been announced in June
Franklin Resources and Power Corporation of Canada have entered into a strategic partnership, which includes the acquisition of global asset management firm Putnam Investments by the former. The transaction is valued at more than $1 billion with Franklin Templeton set to make an initial payment of $925 million in cash and shares to Great-West – Power’s subsidiary and owner of Putnam.
Hedge fund Lansdowne Partners announced its plan to acquire UK equity investment manager, Crux Asset Management, dependent on regulatory approval expected within the next three months, the businesses confirmed.
- Consolidation trend in Europe
The European asset management industry has been consolidating for some time. As competition intensifies, firms are looking to expand their global footprint and gain scale through mergers and acquisitions (M&A). In addition to this, the European Commission's new regulatory measures have forced banks to divest their asset management businesses, allowing standalone players to enter the market.
This trend of consolidation is expected to continue in 2024 as firms look beyond Europe in search of growth opportunities.
- Global consolidation -- a new trend in asset management
Consolidation is a trend in the asset management industry. The industry has seen consolidation across investment styles and geographies, as large firms seek to gain scale and expand their reach by acquiring smaller competitors. This shift toward passive investment vehicles has led to an increase in mergers and acquisitions activity among asset managers, many of which have been driven by private equity firms looking for acquisition targets.
Consolidation can be beneficial for both buyers and sellers: buyers can benefit from economies of scale while sellers gain access to larger distribution networks or higher capital markets liquidity through cross-selling opportunities with other businesses within the same group. However, there are some downsides as well--for example if your firm does not perform well post-merger due to poor integration planning then this could lead into reduced profits over time which may make it difficult for shareholders who invested prior during IPO period when prices were high but now fallen significantly low due to poor performance..
- Global consolidation -- key players in the industry
BlackRock
State Street
Fidelity
PIMCO
JPMorgan Chase (JPM)
The global asset management industry has been consolidating rapidly over the past few years. The following are some of the key players in this space:
BlackRock Inc., which acquired Barclays Global Investors (BGI) in 2009 and then merged it with its own investment management business to form iShares, now one of the largest ETF providers in the world. It also owns many other businesses such as advisory firm MergerTech LLC, real estate investment trust (REIT) company Kennedy Wilson Inc., fund manager GSO Capital Partners LP and institutional fixed income trading platform Prime Services Group LLC. - State Street Corp., known for its custody services but with a growing number of funds under management thanks to acquisitions like Frank Russell Co. - Fidelity Investments Inc., America's largest mutual fund provider with over $2 trillion under management. - PIMCO -- Pacific Investment Management Co., which manages about $1 trillion across fixed-income portfolios including global sovereign debt funds. Other notable players include: Deutsche Bank AGBarclays PlcInvesco Ltd.
- European consolidation -- a new trend in asset management
In the past few years, we have seen a trend toward consolidation in the asset management industry. The market has been consolidating across investment styles and geographies. This is driven by a shift to passive investment vehicles and an increase in demand for active equity managers with expertise in specific sectors or regions.
Investment managers are looking at ways to streamline processes, cut costs and make their businesses more efficient.
Consolidation is a trend in the asset management industry, as managers look to streamline processes and cut costs. In addition to consolidation across investment styles and geographies, there has been a shift toward passive investment vehicles that has driven growth in the market for active equity managers.
The industry is seeing consolidation across investment styles and geographies.
The industry is seeing consolidation across investment styles and geographies. Consolidation across investment styles has been driven by the need to diversify risk, as well as a desire for economies of scale. In addition, some of these firms are looking to expand into new areas of business such as private equity or real estate investment funds (REITs).
Consolidation between asset managers that focus on similar products or geographical regions is not a new trend but it is drivers could be seen as being different from early M&A’s by some of the biggest names in the industry. Goldman Sachs Asset Management acquired PIMCO in 2016; BlackRock acquired Barclays Global Investors (BGI) in 2009; State Street acquired Bankers Trust Company in 1999; Prudential Financial purchased MFS Investment Management Company in 1996; Amundi SA purchased AXA Rosenberg Group Holdings SA & Co KGaA in 2015; JPMorgan Chase & Co bought JW Mason & Co Ltd., which provided risk management services among others things including portfolio management software solutions under its subsidiary JWM Solutions LLP
A shift to passive investment vehicles has driven growth in the market for active equity managers.
The shift to passive investment vehicles has been driven by investors who want to reduce their exposure to stock market risk and volatility, without sacrificing returns. Active equity managers have been able to adapt to this new environment by offering products that give investors access to actively managed strategies at lower costs than traditional mutual funds or ETFs (exchange-traded funds).
In addition, some active managers are also competing with passive investment vehicles by providing investors with more transparency into their investments and performance track record than what is available from other types of funds.
Larger firms are more likely to succeed, but small firms who are able to provide unique value can also succeed.
While it’s true that larger firms have more resources and can afford to hire the best talent, as well as arguable a wider range of offerings and the ability to adapt quickly in response to market changes, although it was the smaller firms who were quickest to adapt to WFH during covid and more flexible in the new realties of working post pandemic. Smaller companies would also argue that their smaller size gives them the flexibility to focus on niche markets or niches within a market, which allows them the opportunity for innovation or differentiation from competitors.
There is a trend toward partnership at the senior level of leadership.
There is a trend toward partnership at the senior level of leadership. The partnerships are usually between two companies that have complementary strengths, such as one with strong distribution channels and another with a strong product line.
Partnerships like these have been seen in other industries where firms are looking for ways to expand their reach without investing too much capital or taking on unnecessary risks.
With increased competition, asset managers must adapt their business models to stay ahead of the curve.
Increased competition is driving consolidation in the asset management industry. The trend is most evident in Europe, where many smaller firms have been acquired by larger ones as they seek to gain a bigger share of the market.
Conclusion
The industry is seeing consolidation across investment styles and geographies. A shift to passive investment vehicles has driven growth in the market for active equity managers. There is a trend toward partnership at the senior level of leadership and toward more flexible work arrangements to attract and retain talent. The industry is also seeing consolidation across investment styles and geographies.
