Asset management mergers and acquisitions are still under discussion this year after the landmark 2020. Potential growth potential from cross-border distribution and public comments from potential buyers such as JPMorgan (NYSE: JPM) as well as State street (NYSE: STT) can keep consolidation at high speed, as per note from Credit suisse analysts. The prospect of a federal capital gains tax increase is an additional incentive to speed up the timing of deals. With so many tailwinds, there seems to be plenty of room for private equity to take a seat at the strategists-dominated table of deals.
Pandemic mergers in the past year have continued at an active pace around the world and in North America in particular. The acceleration that began in 2017 has resumed again amid the pandemic as the book values of asset managers have been lowered by the crisis lows in the stock market. Higher-cap insurers, banks and brokers resorted to lower ratings.
Most of the sector’s consolidation has been driven by strategies, but the deals signed underline the attractiveness of the sector as a whole. Franklin’s resources (NYSE: BEN) expanded its business with separately managed accounts, acquisition Legg Mason for $ 4.5 billion in August last year. Morgan Stanley (NYSE: MS) diversified its direct-to-consumer asset management offerings with $ 13 billion. purchase of E * TRADE, announced in February 2020.
One of the most important factors in the 2020 deal leaves room for private equity participation in the future. Analysts see team departure as a fast track to empowering companies in attractive verticals such as ETFs, direct indexing, ecology, social and governance. There is no reason that financial sponsors known for their carrier relationships cannot build and buy their way to niche product offerings that are attractive to the larger players in the sector on their way out.
Moreover, the reality is that private capital is already there. The point is: Wells Fargo (NYSE: WFC) sold Wells Fargo Asset Management at GTCR as well as Reverence Capital Partners in February for $ 2.1 billion. Deal invoiced as an opportunity to allow management to focus on their institutional, wealth managers and retirement clients outside of the bank’s brokerage division. PE firms recruit veteran Legg Mason Joseph Sullivan be the executive chairman of the redesigned asset management division while remaining CEO of the division Niko Marais…