Fewer M&A deals in 2009, but big gain in assets acquired

Asset manager M&A activity fell 23% in 2009, to 179 transactions from 231 in 2008, although total assets under management of firms involved in transactions was up 179% to $4.682 trillion, spurred by large transactions such as BlackRock’s acquisition of BGI, according to a Freeman & Co. report.

For 2010, deals involving firms in the $3 billion-to-$30 billion AUM range will rise but “large transformational asset management deals will diminish,” the report predicts. Domestic deals will increase in the first half of this year “as overcapacity in the industry spurs deals, but cross-border interest will not return until increased global economic confidence in 2011.”

Private equity firms will acquire more or be involved in more mergers and acquisitions “as waning government support of financial companies pressures firms to divest non-core assets and an increased ability to obtain bank and loan funding boosts (private equity) firms’ ability to complete deals,” the report predicts.

The number of 2009 transactions involving deals with more than $10 billion in AUM fell 13% to 27 in 2009, while number of deals in the $1 billion-to-$10 billion AUM range fell 45% to 49, the report said.

The BlackRock/BGI deal, the largest asset management transaction in 2009, involved $1.5 trillion in acquired assets under management, the report said. It was followed by Credit Agricole Asset Management’s acquisition of Societe Generale Asset Management with $808 billion in acquired assets; Deutsche Bank’s acquisition of Sal. Oppenheim Jr. with $200 billion; Ameriprise Financial’s acquisition of Columbia Management Group with $165 billion; Bank of New York Mellon’s acquisition of Insight Investment Management with $133 billion; Macquarie Group’s acquisition of Delaware Management Holdings with $124 billion; and Invesco’s acquisition of Van Kampen, a Morgan Stanley unit, with $119 billion.

Freeman is an M&A advisory and strategic consulting firm specializing in the financial services industry.

Barry B. Burr is a reporter at Pensions & Investments, a sister publication to InvestmentNews.