Financial institutions M&A sector trends: asset/wealth management — H1 2021 and outlook for H2 2021
Market consolidation continues at a feverish pace. The UK tops the leader board, notching up 17 noteworthy deals in H1 2021.
Overview
CURRENT MARKET
- Consistent activity levels
WE ARE SEEING
- Market consolidation:
- Middle-sized asset/wealth management deals (e.g., Amundi's acquisition of Lyxor)
- Smaller asset/wealth management deals (e.g., Titan Wealth's acquisition of Tavistock Wealth and Global Prime Partners)
- UK consolidates at a feverish pace—concentration of smaller deals (>17 smaller deals in H1 2021)
- Banks adopt differing strategies:
- Scaling-up operations (e.g., Aktia's acquisition of Taaleri's wealth management business)
- Re-deploying capital resources (e.g., Crédit Agricole's disposal of Indosuez Wealth Management)
- Focus on wealth concentrations in emerging economies
- Specialist asset management sub-sector consolidation
KEY DRIVERS/CHALLENGES
- COVID-19 plagues traditional models:
- Increasing regulatory pressure—true burden of MiFID II implementation becomes increasingly stark (e.g., UK considers overhauling MiFID II)
- Rising technology costs to combat growing reporting needs, AML risks and cyber-attack sophistication
- Increasing fee compression as DIY options gain market prevalence
- Scaling-up in specialist asset management:
- Financial planning (e.g., Flexpoint Ford's acquisition of AFH Financial)
- Fund platform (e.g., Euroclear's acquisition of MFEX Group)
- Trust administration (e.g., Ocorian's acquisition of Nordic Trustee)
- Credit fund (e.g., Cairn Capital's acquisition of Bybrook Capital)
- Capital markets administration (e.g., Sanne Group's acquisition of Strait Capital)
- Growing focus on WealthTech and robo-advisory:
- Established players plan for the future
- WealthTech players stockpile growth capital (e.g., Scalable Capital, Tifin, WealthArc, Elinvar and Wealthpilot all successfully raised capital in H1 2021)
TRENDS TO WATCH
- Heating up of transatlantic consolidation activity (e.g., Ameriprise's acquisition of BMO's European asset management business)
- Increasing ambition to tap public capital (e.g., Pensionbee's LSE IPO and Allfunds' Euronext Amsterdam IPO)
- Growing investor appetite for ESG offerings
OUR M&A FORECAST
Asset/Wealth Management—Publicly reported deals & situationsMarket consolidation to continue at a feverish pace as smaller and medium-sized asset/wealth managers come under increasing pressure. Larger managers prepare for the future through increased focus on WealthTech.
Asset/Wealth Management—Publicly reported deals & situations
Market consolidation
Despite COVID-19, deal-making has raged on. Figures show that 2020 was a buoyant year for asset management M&A activity, with a record 122 deals taking place in the UK. Financial News (June 2021)
The UK's IFA space is tipped to see larger-scale M&A as well as some IPOs over the medium term as it continues to consolidate amid an influx of private capital. Mergermarket (April 2021)
Deal-hungry buyout groups are hunting across the investment industry, with Blackstone, KKR, General Atlantic, Stone Point and Thomas H Lee acquiring asset or wealth management businesses in the past 12 months. Financial Times (March 2021)
M&A across the investment industry almost tripled in 2020. Deals involving asset and wealth managers rose from US$13.6 billion in 2019 to US$38.9 billion in 2020. Financial Times (March 2021)
There were a record number of mergers and acquisitions in the asset management sector in 2020. Activists like Nelson Peltz and John Paulson are agitating for deals. Financial Times (January 2021)
Deal highlight:
White & Case advised Catella, a leading specialist in property investments and fund management in Europe, on the sale of a majority stake in Catella Asset Management to Arkéa Investment Services.
Deal highlight:
White & Case advised Sinara Financial on its acquisition of UK investment management business Elbrus Capital Partners.
Deal highlight:
White & Case advised the Meeschaert Group on the sale of its private banking and asset management activities to La Financière Patrimoniale d'Investissement.
Mid-sized:
- Amundi (France): Acquisition of Lyxor (June 2021)
- PineBridge Benson Elliot (UK): Acquisition of Sigma Capital Group (June 2021)
- Altamar Capital (Germany): Acquisition of CAM Alternatives (June 2021)
- LFPI (France): Acquisition of Meeschaert (April 2021)
Smaller:
- Sinara Financial (UK): Acquisition of Elbrus Capital Partners (June 2021)
- Vontobel (UK): Acquisition of remaining 40% of TwentyFour Asset Management (June 2021)
- Rathbone Brothers (UK): Acquisition of Saunderson House Group (June 2021)
- Tavistock Investments (UK): Acquisition of Chater Allan Financial Services' business (June 2021)
- Titan Wealth Holdings (UK):
Acquisition of Tavistock Wealth (June 2021)
- Titan Wealth Holdings (UK):
Acquisition of Global Prime Partners (June 2021)
- JTC (UK):
Acquisition of INDOS Financial (June 2021)
- Savills Investment Management (UK):
Acquisition of 75% stake of DRC Capital (May 2021)
- Fairstone Group (UK): Acquisition of Sterling Asset Management (May 2021)
- Avison Young (France): Acquisition of Cassian (May 2021)
- Mattioli Woods (UK): Acquisition of Ludlow Wealth Management Group (May 2021)
- Raymond James (UK): Acquisition of Cebile Capital (May 2021)
- Alpha Financial (UK): Acquisition of Lionpoint Holdings (May 2021)
- AssetCo (UK): Acquisition of Saracen Fund Managers (May 2021)
- Commencer Capital (Australia): Acquisition of IEC Funds Management (May 2021)
- Canaccord Genuity Group (UK): Acquisition of Adam & Co's private client investment management business (April 2021)
- Azimut (Brazil): Acquisition of MZK Investimentos (March 2021)
- Aktia (Finland): Acquisition of Taaleri's wealth management business (March 2021)
- Preservation Capital (UK): Acquisition of Parmenion Capital Partners (March 2021)
- Alantra (Spain): Acquisition of 40% of MCH Investment Strategies (March 2021)
- VERSO Capital & ALDINI Capital (Luxembourg): Merger (February 2021)
- Arkéa Investment Services (France): Acquisition of majority stake in Catella Asset Management (January 2021)
- Carneo (Sweden): Acquisition of 70% of Holberg (January 2021)
- RJAMI (France): Acquisition of 57% of Raymond James Asset Management International (January 2021)
Differing FI prerogatives
China's wealth market was worth US$18.9 trillion in 2020, up 10% from a year earlier. Foreign asset managers are rushing to capitalise on China's vast pool of savings as the government liberalises its tightly controlled financial system. Financial Times (May 2021)
Tag-out (disposals):
- Société Générale (France): Disposal of Lyxor (June 2021)
- Millennium BCP (Switzerland): Disposal of Swiss private banking arm (June 2021)
- Commercial Bank Modulbank (Russia): Disposal of Vostochny Capital (May 2021)
- HSBC (Saudi Arabia): Disposal of Saudi Arabian asset management business (May 2021)
- Banca Agricola Popolare di Ragusa (Italy): Disposal of Finanza Sud Sim (May 2021)
- Crédit Agricole (Brazil): Disposal of Crédit Agricole's Brazilian wealth management business (April 2021)
- NatWest (UK): Disposal of Adam & Co's private client investment management business (April 2021)
- Crédit Agricole (US): Disposal of Indosuez Wealth Management (March 2021)
- Taaleri (Finland): Disposal of Finnish wealth management business (March 2021)
- Standard Life Aberdeen (UK): Disposal of Parmenion Capital Partners (March 2021)
- Natixis (UK): Disposal of majority stake in H2O (January 2021)
Tag-in (acquisitions):
- Union Bancaire Privée (Switzerland): Acquisition of Millennium BCP's Swiss private banking business (June 2021)
- Sovcombank (Russia): Acquisition of Vostochny Capital (May 2021)
- The Saudi British Bank (Saudi Arabia): Acquisition of HSBC Saudi Arabia's asset management business (May 2021)
- Intesa Sanpaolo (Italy): Acquisition of Finanza Sud Sim (May 2021)
- Banco Safra (Brazil): Acquisition of Crédit Agricole's Brazilian wealth management business (April 2021)
- UBS (Brazil): Acquisition of 40% of Consenso (April 2021)
- Santander (US): Acquisition of Indosuez Wealth Management (March 2021)
- Aktia (Finland): Acquisition of Taaleri's wealth management business (March 2021
Financial planning M&A
- Flexpoint Ford: Acquisition of AFH Financial (June 2021)
- Oreana Group: Acquisition of Grant Thornton's Australian private wealth business (April 2021)
Fund platform M&A
- Deutsche Börse: Acquisition of 48.8% of Clearstream Fund Centre (May 2021)
- Euroclear: Acquisition of MFEX Group (March 2021)
- HPS Investment Partners: Acquisition of Bardin Hill's European CLO business (March 2021)
- ACOLIN: Acquisition of Fundbase (February 2021)
Trust administration M&A
Deal highlight:
White & Case advised Ocorian, the Inflexion-backed global trust and administration business, on the financing and management incentive programme of its acquisition of Nordic Trustee.
- Ocorian: Acquisition of Nordic Trustee (June 2021)
- Mattioli Woods: Acquisition of Exempt Property Unit Trust (January 2021)
Credit fund M&A
- Cairn Capital Group: Acquisition of Bybrook Capital (February 2021)
- GetBack: Acquisition of Dogmat Systemy (January 2021)
CapMarkets/fund administration services M&A:
Deal highlight:
White & Case advised Ocorian, the Inflexion-backed global trust and administration business, on the financing and management incentive programme of its acquisition of Emphasys Technologies.
- Sanne Group: Acquisition of Strait Capital (April 2021)
- ZEDRA: Acquisition of BFCS (March 2021)
- Ocorian: Acquisition of Emphasys Technologies (March 2021)
High investor appetite
Financial sponsors (acquisitions):
- GTCR and Reverence Capital: Acquisition of Wells Fargo’s asset management division (February 2021)
Financial sponsors (equity investments):
- Sovereign Capital Partners: £55 million investment in Skerritts (March 2021)
- Vitruvian Partners: €100 million investment in Carne Group (January 2021)
- ToscaFund Asset Management: Participation in €25 million Series C funding round for Elinvar (January 2021)
- Seventure: Participation in €8 million Series A funding round for Wealthpilot (January 2021)
Foreign investors:
- Ameriprise Financial: Acquisition of BMO Financial Group’s European asset management business (April 2021)
- Nuveen: Acquisition of Glenmont Partners (January 2021)
Market appetite:
- Pensionbee: London Stock Exchange IPO (April 2021)
- Allfunds: Euronext Amsterdam IPO (April 2021)
Insurers:
- Aegon: Acquisition of Pension Geeks (April 2021)
- Utmost Group: Acquisition of Quilter International (April 2021)
Digitalisation marches on
Nutmeg surpassed £3 billion in AuM following a record 72% year-on-year growth. Finextra (April 2021)
Traditional wealth managers have been among the slowest parts of the finance industry to embrace fintech, with their ultra-wealthy clients preferring the personal touch of silver-service chatbot financial advice. Financial Times (January 2021)
Established players plan for the future:
- Alter Domus: Acquisition of Investors Economic Assurance (June 2021)
- Azimut Holding: Acquisition of Epic’s fintech and alternative finance structuring division (February 2021)
WealthTechs stockpile growth capital:
- Scalable Capital: Successful €150 million Series E funding round, led by Tencent (June 2021)
- WealthArc: Successful US$4 million Seed funding round, led by The Next Impact (February 2021)
- Elinvar: Successful €25 million Series C funding round, led by ToscaFund Asset Management (January 2021)
- Wealthpilot: Successful €8 million Series A funding round, led by Seventure (January 2021)
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