The WSJ Fund Track
is unusually relevant this morning. The column by Diya Gullapalli focuses on merger speculation now bubbling in the industry. The spinoff of Phoenix Investment Partners
, the shopping of J. & W. Seligman & Co.
and the speculated upon potential sales of Legg Mason
and Royce Funds
are among the rumors touched on by Gullapalli. Not touched on is chatter that Matthews Funds
and Nicholas Group
are also prepping for potential sales.
Seligman's silent auction has already been touched on -- the reported interested buyers are Principal Financial and Ameriprise Financial -- while Phoenix's spin-off has been openly planned.
Meanwhile, Gullapalli adds that National City has scrapped plans to put its Allegiant
funds on the sales block after it raised financing from Corsair Capital LLC in recent weeks. She also notes the planned IPOs of Julius Baer Americas
and Turner Investment Partners
Driving the sales are a number of factors: on the sales side, banks such as National City are thought to be looking for ways to raise capital in the current capital-starved market. On the buy side, bidders are seeing potential bargains as AUM levels are falling broadly for the first time since the 2000-2003 downturn. Among public asset managers, market caps have dipped by more than 10 percent this year, according to the article.
In 2007, there were 241 deals worth more than $50 billion, according to data collected by Jefferies Putnam Lovell. So far this year, there have been 70, which puts the market on a similar pace. Though the WSJ reports the activity as "fund manager" deals, the numbers reflect all deals in the asset manager space, many of which are deals of pension fund managers, high net worth managers and hedge funds. Many of those deals are driven by different factors than those driving deals of Forty Act funds.
All of this activity should present the opportunity for strong hands to consolidate assets through acquisition of weaker hands. Those deals can come either directly through M&A or indirectly by wooing investors and advisors from rivals that cut back on marketing and sales efforts as times toughen.
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