for the New Year continued to flood in last week and this morning –
even if the main news story around Europe seemed to be that it was
snowing. Some of the predictions for 2010 looked to the structural rather than the investment side of the business. Last week, Jeffries & Company released a forecast predicting that global M&A activity in the asset management industry would be dominated by “significant strategic deals involving independent firms such as Advisory Research’s sale to Piper Jaffray and Metropolitan West Asset Management’s purchase by TCW” in 2010.
This contrasts with 2009 when divestitures dominated and only 61 independently-owned managers changed hands - the lowest level in more than a decade, and 57% below the previous year’s tally, according to the New York-based firm.
“We expect divestitures to continue to play out through the first half of 2010 when the urgency of capital raising and strategic realignment of financial institutions should taper off,’’ said Aaron Dorr, a managing director in Jefferies’ Financial Institutions Group. “We also anticipate aging owners of independent firms who missed the last bull market to seek to transact in 2010 given improving market conditions, asset flows and pricing.”
The biggest deal in the fourth quarter of 2009, both by assets under management and disclosed deal value, perhaps set the tone. It was Deutsche Bank’s €1.3bn acquisition of the German private bank Sal. Oppenheim & Cie – a firm that bills itself as “one of the leading independent private banking groups in Europe” and “a family enterprise [...] now in the seventh generation”.
Meanwhile, asset managers – independent or otherwise – looking to make cost savings may find UCITS IV does not provide the succour they had hoped. According to a new survey from Ernst & Young released today, UCITS IV is not bringing the operational cost reductions many European investment fund managers assumed it would.
“The focus has turned to using UCITS IV to optimize the operating model and fund ranges, to align better with the business strategy of the organization,” says Crispin Rolt, Ernst & Young’s UCITS IV leader. “The investor will still benefit and by pooling funds it is anticipated that there will be opportunity to reduce some of the expense borne by the fund.”
The investor will still benefit. Hmm. Haven’t we heard that somewhere before?
And if the news that investors are still waiting to benefit from possible cost reductions doesn’t paint your Monday morning grey, try this for size: according to a survey of global compliance offices conducted by Complinet, a provider of risk and compliance solutions to the financial services industry, the next financial crisis will strike within the first half of the new decade.
“The continuing lack of company transparency and accountability to the markets and the public makes the possibility of another crisis almost assured,” says one of the businesses questioned by Complinet – and 77% of those surveyed agree with him.
Ah dear. And all the lovely snow is turning to slush...
Fiona Rintoul, Editorial Director
©2010 Funds Europe