EUROPE – The increasing power of investment consultants and more activity from pension fund trustees are among the pressures that could lead to more mergers in the European asset management industry, PricewaterhouseCoopers says.
“European asset managers are currently facing a number of different challenges, including continuing pressure on margins in traditional product areas and concerns over conflicts of interest across the industry,” PWC said in a briefing note.
“The pressure on traditional European institutional players has also been driven by the increased focus by their client base on absolute returns rather than relative returns against a benchmark,” the report by Nick Page and Andrew Cann stated.
“This is seen by the trend to move to specialist mandates, the increased power of investment consultants (particularly in the UK and the Netherlands) and more active management from pension fund trustees.”
PWC believes the current low level of mergers and acquisition activity in the market might be able to change in the near term.
It said European asset management was the least active financial sector for M&A last year – there was just €3.1bn of deals in the sector, just 6.9% of deals by value.
“We anticipate that an increase from this level of asset management activity will be driven by two factors,” PWC said. It cited corporate M&A activity and private equity M&A.