Expansion to drive asset management M&A

In its first-half 2009 M&A report, the investment banking group said financial services M&A activity over the next year will be driven by buyers seeking to grow, rather than sellers who are anxious to survive, as capital markets recover and investors' fears subside.

The report highlighted that asset managers were the most active buyers, accounting for 36% of all deals in the first half of the year. It said asset mangers are seeking to take advantage of unique acquisition opportunities to add scale to their firms, fill product gaps and gain talent.

It said that although divestitures will still constitute the majority of assets under management in the next 12 months, fund firms will resume the search for global clients and robust investment capabilities.

Other trends which Jefferies expects to play out over the next year include alternative asset mangers making deals in the near term, which will be driven largely by survival and positioning for the next bull cycle.

It said that although alternative asset management transactions have abated, buyers are noting the stellar performance generated and the return of asset flows into the alternative sector.

The largest asset management deals in terms of assets under management transacted in the first half of this year, includes BlackRock's acquisition of Barclays Global Investors, followed by Crédit Agricole's acquisition of Société Générale Asset Management, and then Sumitomo Mistui Banking, Mitsui Sumitomo Insurance, and Sumitomo Life Insurance acquiring Sumitomo Mitsui Asset Management.