GLOBAL – The recently announced deal between BlackRock and Merrill Lynch Investment Managers – and the separate Citigroup/Legg Mason tie – represent a wake-up call to the global asset management industry, according to a new report.
Investment bank Putnam Lovell NBF Securities said that sales of asset management businesses worldwide surged in 2005 by deal value and by assets under management changing hands.
It said distributors and manufacturers “scrambled to cope with an historic shift in the global money management industry”.
While the total number of deals in 2005 fell, to 134 from 157, the disclosed value of transactions more than doubled to $17.5bn (€14.77) from $8.2bn. The amount of acquired AUM rose to $1.1trn from $729bn.
And the MLIM-BlackRock deal “likely will be followed by more strategic repositioning in 2006, producing perhaps the most active year for transactions in investment management history”.
The comments come in a report called ‘Shake, Rattle, and Roll: Tectonic Realignment’.
“The proposed BlackRock/Merrill deal, and last year’s groundbreaking Legg Mason/Citigroup transaction, are a wakeup call for the global asset management business,’’ the report’s author Benjamin Phillips.
“Before, manufacturers and distributors in fund management were drifting lazily toward their respective corners of the industry. Those days are over.
“We anticipate that a number of vertically integrated fund management systems worldwide - proprietary funds linked with captive distribution - may now break apart in the near future.’’