The M&A (mergers and acquisitions) activity is on the up after a somewhat lean period. The current market environment is “as good a time as any” for investment firms to make acquisitions says Martin Gilbert, a fund management veteran.
“If you can find acquisition, it’s a great time to do them,” said Gilbert. “Valuations are down and the usual headwinds are there: public to private, active to passive, fee compression, ESG. Now there is a big move out of equities into bonds.” The former chief executive of Standard Life Aberdeen and current chairman of AssetCo and Revolut has struck more than 40 deals during his ‘City’ (financial district of London) career.
Since taking the helm of AssetCo, he has turned it from a cash shell into an acquisitive fund management company. The firm announced in March it would acquire Ocean Dial Asset Management from Avendus Capital Asset management for £4.1 million. It will merge the business with investment firm River & Mercantile, which it bought in 2022.
AssetCo’s other recent deals have included the acquisition last year of Edinburgh-based SVM Asset Management and its purchase of Saracen Fund Managers in 2021 for £2.75 million. Gilbert also helped orchestrate the sale of rize ETF (Exchange Traded Fund) to Cathie Wood’s ARK Invest – a move that allowed the US-based firm to break into the European market.
“It is as good a time as any (to deal). But there are more buyers than sellers at the moment,” Gilbert said. “The key is the integration. It’s easy to buy and it’s very hard to integrate.”
Other asset managers have spotted an opportunity to make acquisitions. Amundi chief executive Valerie Baudson recently said that the current market turmoil presents a “potential opportunity” for takeovers. She said that was particularly the case as the firm looks to grow its technology expertise.
“We only look at things that accelerate our organic growth. It could also be increasing our capacity in technology and services in future, now that is an important strategic move for us. As long as it answers to the strategy, we will look at it.” Baudson added: “The ETF business is still only an institutional business in Europe, which means there is huge growth ahead of us.”
The asset manager has grown through a series of acquisitions over the past decade. These have included its 2016 purchase of Pioneer Investments from UniCredit and its acquisition of Lyxor two years ago. Meanwhile, BlackRock’s chief executive Larry Fink told analysts last month that the firm was looking for more “transformational” M&A deals. He added that BlackRock is engaged in more discussions than it has been for “many, many years.”
Fink said BlackRock, which is the world’s biggest asset manager, had spent “about $4 billion on M&A” over the past five years. These have included deals such as the 2019 acquisition of software provider eFront and the purchase of custom indexing specialist Aperio in 2020. Several notable deals have been struck this year across the asset management sector.
Franklin Templeton has made a string of acquisitions recently. It bought alternative credit manager Alcentra from BNY Mellon last year and financial services firm Legg Mason in 2020. The US-based asset manager also announced in May that it would buy rival Putnam Investments for around $925 million. The deal was part of Franklin’s ambition to grow insurance client assets.
Meanwhile, UK-based have also been looking for acquisitions this year. Lansdowne Partners announced that it would buy Crux Asset Management. Man Group also revealed it would take a controlling stake in Varagon Capital Partners as part of a push into private credit. (The writer is our foreign correspondent based in the UK)
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