FundForum 2012: Can Europe’s asset managers pull off M&A?
Consolidation in the asset management sector, especially in Europe, is a constant theme in industry forums. There were 23 M&A deals in the sector in 2011, according to Jean-Baptiste de Franssu, chairman of advisory firm Incipit, who chaired the third FundForum International 2012 CEO panel on Wednesday morning.
“Most of the largest asset management firms have gone through acquisitions,” said de Franssu, a former president of Efama, who also noted that consolidation had helped lift the market share of US independent players from 28 to 55 per cent of assets under management.
Europe needs a similar process, according to Javier Marin Romano, head of global private banking at Banco Santander. “Europe lacks independent global players to compete with our US counterparts,” he said.
However, James Charrington, chairman of BlackRock’s EMEA, business, says M&A is not the whole answer. “Many firms are for sale, but few are being sold. I believe regulation will drive consolidation – there are too many asset management firms, but not enough good ones.”
Martin Gilbert, chief executive of Aberdeen Asset Management, argues that banks should hold on to their asset management businesses if they can. “It seems crazy to sell your best business, although in this climate it’s probably the only one you can sell,” he said. If banks must sell up, Gilbert advises seeking a contribution deal, like Aberdeen’s with Credit Suisse. If you find the right partner, he says, the synergistic benefits can be huge.
Asset inflows are already dictating who the likely winners will be. “It’s winner takes all,” said de Franssu. “Fewer and fewer players are gaining more and more of the overall market share.” Added Carmignac Gestion managing director Eric Helderle: “At some point, if companies aren’t getting inflows they will be bought out, or the market will decide they won’t survive.”
Gilbert argued that it was much easier for independent firms to buy bank subsidiaries than boutique shops: “The deal with Credit Suisse worked out very well for us given that it has one of the world’s largest private banks.”
But he doubts whether private equity can play a big role in consolidation. “The amount of due diligence that private equity firms do tends to swamp deals,” he said. “The Guggenheim-Deutsche Bank deal involved two PE firms, so I’m not surprised it didn’t succeed.”
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