Asset management consolidation continues apace as SLI bids for Ignis
The latest in a series of consolidations and takeovers within the UK asset management industry could take place as Standard Life Investments (SLI) moves to take control of Ignis Asset Management.
The firm, with around £67bn (€80bn) in assets under management, announced the approach from SLI amid market speculation of a deal.
Phoenix Group, the parent of Ignis, said as a caveat that the talks provided no certainty any deal would be agreed, with a further announcement expected in the coming days.
Any such deal would create the latest link in a chain of consolidation in the UK market in recent years.
Earlier this year, Canadian institution Bank of Montreal made a move to take over UK manager F&C in a £700m deal.
This followed Aberdeen Asset Management’s move for Scottish Widows Investment Partnership in a £550m cash and equity deal, as well as Schroders’ takeover of retail manager Cazenove.
Any finalisation of SLI’s plans to acquire Ignis would also see it join the £250bn AUM ‘club’, with its list of managers growing ever longer.
However, further consolidation in the market may be a cause of concern for asset owners, experts have warned, as a lack of competiiton might lead to fee increases.
Aon Hewitt’s UK head of equity manager research, Phil True, said consolidation in the industry could be positive or negative, depending significantly on the foundations of any movement.
He said the “weeding out” of poorer performers, being taken over by superior managers, could lead to cost efficiencies for asset owners.
“What we are always wary of is when consolidation is driven by asset gathering, in a bid to boost the value of assets held under management,” he said.
“This is trying to grow the company at the top level without thinking about the negative impact of clients, such as the turnover of investment staff. In terms of the current trend, it is a bit of both.”
He said the market was moving towards larger asset managers that could offer the benefits of scale, and boutique managers with strong investment philosophies, with managers in the middle susceptible to takeovers.
“It is a Darwinian process,” he said, “and that is not a bad thing. What will be negative is if it reduces choice in the market, and the regulators will be looking at that in detail.”
The trend is not unique to the UK market. Recent research from accountancy and advisory firm PwC argued that the Dutch market also faced significant consolidation.
It said asset managers would need to invest heavily in technology, or move abroad, to survive any prolonged period of negative market forces.