NEWSLETTER: Business as usual on the Med?

I didn’t make it over to Monaco this year for Fund Forum, but I was told last week by an early escapee that, while numbers were down, the mood was “business as usual” – something which my interlocutor described as “worrying”. Indeed... There have been so many previous industry gatherings in what I see Reuters is describing as “the jet-set seaside resort” (Do I sniff a hint of opprobrium? If you live in the UK, are your expenses in order?) that involved conversations about rebuilding trust etc, and that were followed by little or no action, it’s hard not to be just a teensy-weensy bit cynical. And, yes, worried.

Despite the blythe spirits seemingly on display on the Med last week, will it be different this time? Will lessons really be learnt post the very bad crisis we’ve just been through?

“It will have to be different,” my spy said. “There’s been so much destruction of wealth.”

Otherwise, the thème du jour at this year’s Fund Forum was BlackRock and its acquisition of Barclays Global Investors – a deal worth $13.5 billion (€9.7 billion) that will create an asset management mega-giant twice as big as its nearest rival with a workforce the size of a small town.

The deal had “lit the touch paper”, according to Tom Brown, head of investment management EMEA at KPMG. A number of European asset managers are now eyeing potential US acquisitions, he added, as banks seek to sell asset management units.

Consolidation is a theme that has been with us for what seems like forever. But this time it’s for real, according to Brown. “Up until now there has been a lot of talk, but this deal [BlackRock/BGI] should spur some action,” he said.

Others, however, questioned the drive to consolidate. Edward Bonham-Carter, CEO of Jupiter Asset Management, reminded the conference that scale isn’t always the best route to outperformance, while Massimo Tosato, vice chairman of Schroders, noted that a buyer of a bank-owned asset manager was buying “the assets and the capabilities, but not the clients”.

But perhaps the most worrying comment came from Amin Rajan, CEO of consultancy Create-Research. Of consolidation – particularly cross-border consolidation – he said, “There is an element of merry-go-round here.”
I think that’s another way of saying it’s a bandwagon. And if there’s one thing we’ve learnt over the past two years, it must surely be that jumping on bandwagons is bad.

Fiona Rintoul, editorial director
©2009 funds europe

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