M&A activity in Asian asset management set to rise

Globe_AsiaMergers and acquisitions in Asian asset management are due to increase over the next 18 months, including new joint ventures in China and potential consolidation in India.


According to consultancy firm, Cerulli Associates, the complex interplay between growth opportunities, regulatory change, and caution following the financial crisis will shape the deals to come.

“The prospect of increased stability in Asian financial markets and a robust economic growth outlook, providing Europe's sovereign debt crisis does not intensify, will form the foundation for the uptick in M&A,” the firm said in one of its most recent reports on the Asian industry.

"Simply highlighting Asia's growth potential is no longer enough to make a deal fly, as was the case before the crisis," said Ken Yap, director and head of Cerulli's Asia-Pacific research, "Unless expansion into the region via M&A comes at the right price and with the right controls, shareholders and boards will not sanction the deals-it's all about growth at the right price now.”

Although post-crisis caution will constrain U.S. and European asset managers' ability to snap up Asian targets, such deals will still occur, the consultants’ research showed.

China, for instance, is opening up again to new asset management joint ventures, after putting a brake on approvals due to the impact of the global financial crisis. Regulatory change in the country is also raising the likelihood of other corporate activity in its asset management sector. Recent regulatory changes in India and South Korea are set to have a similar impact in those countries.

Yap said: "In China, we can expect new mainland joint ventures, consolidation among smaller firms, and growing international outreach by domestic manufacturers.

"Meanwhile, a big change to the economics of the fund industry in India following major regulatory developments could well stoke some consolidation there too.”

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