Aberdeen highlights appetite for acquisitions
Aberdeen Asset Management has announced its second purchase in three months as nearly half of fund management executives said they are evaluating acquisition opportunities in a recent State Street survey.
In the report, “Opportunities for Optimism? A New Vision for Value in Asset Management,” 46% of respondents said they were evaluating acquisition opportunities. State Street commissioned the survey of 400 senior executives in the asset management industry from 23 countries which was conducted by FT Remark in April and May this year.
Andy Wilson, head of asset manager solutions UKMEA & Nordics at State Street, told Markets Media that fund managers were assessing acquisitions or joint ventures for several reasons.
“They may want to acquire talent, such as to enter alternatives, or increase distribution geographically or into new channels,” he added. “They may want product excellence, for example to move from equities into multi-asset or fixed income, or to expand their brand or scale.”
The survey found that over the next three years 42% of respondents are preparing to enter a new product category for the first time, 52% plan to expand distribution networks and 48% will tap new distribution channels.
The UK’s Aberdeen Asset Management said yesterday it has agreed to acquire Arden Asset Management, a US hedge fund provider.
Martin Gilbert, chief executive of Aberdeen, said in a statement: “The acquisition of Arden emphasises further Aberdeen’s commitment to diversifying its overall business and to growing its alternatives platform. Arden’s liquid alternatives platform in the US is particularly attractive as it provides investors with exposure to a portfolio of hedge fund-like strategies but importantly offers daily liquidity.”
In May Aberdeen had announced the acquisition of Flag Capital Management, a private equity and real asset manager. Aberdeen said at the time that the addition of Flag’s US and Asia-focused investment capability would offer clients global private markets solutions when combined with Aberdeen’s European business and accelerate organic growth.
The State Street survey found that a quarter of fund management executives believe it is “highly likely” they will face direct competition from a non-traditional new entrant such as a technology or non-financial services company in the next five years. A further 54% said this is “somewhat likely.”
Wilson said: “12 to 24 months ago fintech was seen as being on the horizon but now it is seen as ever present.”
He added that asset managers are reviewing fintech partnerships as one of the ways to address the growing demands of clients for more personalised and sophisticated information, alongside using their own expertise.
Despite the likelihood of increased competition, more regulation and the pressure to cut costs, Wilson said 90% of survey respondents were positive about growth prospects for the asset management industry. Nearly three quarters, 70%, of asset managers interviewed said they are rethinking their business strategy around demand for multi-asset strategies
“Asset managers are moving away from providing standard products to more bespoke solutions to take advantage of growth opportunities,” Wilson added.
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The transaction is expected to close in the third quarter of 2018.