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Asset managers expecting global surge in M&A activity

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  • Asset managers expecting global surge in M&A activity

GLOBAL - Asset managers are expecting to see a wave of international merger and acquisition (M&A) activity over the next 12 months, according to a survey by KNEIP.

The asset management services provider said 90% of respondents to its survey believed global M&A in the industry would boom over the coming year.

Moreover, 45% of respondents said they had firm cross-border expansion plans in place, while 42% said they were already considering international expansion into Europe, Asia and Latin America in response to an expected increase in investor interest from those regions.

According to KNEIP, 19 deals have already been made in the first half of this year, an almost fourfold increase compared with the same period last year.

Bob Kneip, chief executive, said the expected surge could be attributed to growing global demand for UCITS products, which have become associated with "excellence and strong supervision".

He also noted demand from Asia was now particularly strong.

He added: "Latin America has also accepted UCITS as providing a stable, high-quality, well-regulated investment product, with significant investor protection.

"Pension funds in countries such as Peru and Chile have started using UCITS structures in the last few years."

KNEIP surveyed 68 industry participants, of whom the majority were asset managers, in April this year.

More than 90% of respondents said it was 'important' or 'very important' to maintain a local point of contact for investors.

KNEIP said this meant investor communication should be one of the top three considerations for investors selecting asset managers, along with absolute return and investment strategy.

In addition, related communication issues such as transparent reporting (65%) and enhanced investor education (47%) were quoted as prime tools for restoring consumer confidence in investment products over the next 12 months.

The study also found that the industry expects a certain degree of streamlining over the next year, with 65% expecting more international fund consolidations.

Kneip said: "Until UCITS IV comes into force, international consolidation is only available to investment companies, but as from July 2011, all types of UCITS funds will be able to merge on a domestic and cross-border basis.

"It is therefore likely this trend will continue well beyond the next 12 months as asset managers take advantage of this benefit under the new regulation."

 

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