Differing bank prerogatives drive deal-making—-some European banks tag-out from non-core business lines, while others tag-in for stable returns.
Overview
Current market
- Consistent activity levels
We are seeing
- Market consolidation as smaller asset / wealth managers consolidate in the COVID-19 climate— mostly smaller deals (>7 smaller UK deals), with a sprinkling of medium-sized deals
- Differing bank prerogatives:
- Some banks tag-out (e.g., Banco Sabadell's disposal of Sabadell Asset Management)
- Other banks tag-in (e.g., Andbank's acquisition of Esfera Capital)
- Specialist asset management sub-sector consolidation:
- Fund platform (e.g., Clearstream's acquisition of 51.2% of UBS Fondcenter)
- Debt servicing (e.g., Cerved's acquisition of 50.1% of Quaestio)
- Trust administration (e.g., Intertrust's acquisition of Wells Fargo Trust Corporation)
- Direct lending (e.g., Bridgepoint's acquisition of EQT's credit business)
Key drivers/challenges
- COVID-19 exacerbates industry-wide pressure on profitability:
- Customers tightening belts and reducing spend
- Shift towards market-driven pricing on account of MiFID II fee transparency requirements
- Increasing customer familiarity / confidence with WealthTech (Smarterly, Alpian, Capdesk and InvestSuite all successfully raised growth capital notwithstanding COVID-19 chaos)
- Tagging-out:
- Monetisation of non-core assets—wide potential buyer universe (e.g., local / foreign trade, PE and insurers)
- Favouring lower-cost WealthTech opportunities (e.g., Hauck & Aufhäuser's wealth management partnership with Raisin)
- Tagging-in:
- Seeking stable returns (e.g., FNZ's acquisition of Irish Progressive Services International)
- Tapping into new customer bases (e.g., J.P. Morgan's acquisition of remaining 49% of China International Fund Management)
- Implementation of digitalisation strategies (e.g., Deutsche Bank's equity investment in Qplix)
Trends to watch
- Stressed / distressed opportunities involving smaller asset / wealth managers with high cost bases
- Consolidation amongst direct lenders / credit managers
- Will the FCA's DP20/2 proposals for a new UK capital regime for investment firms level the playing field, or create winners and losers
Our M&A forecast
Consolidation activity to continue as COVID-19 exacerbates profitability pressures and turbocharges customer familiarity with more costeffective WealthTech options
Publicly reported deals & situations
BlackRock, Vanguard and State Street have seen their assets shrink by an estimated US$2.8 trillion in 2020 as a result of recent market chaos caused by the COVID-19 pandemic (FT - March 2020)
Market consolidation
Market highlight:
Tilney's and Smith & Williamson's successful merger to create Tilney Smith & Williamson, the UK's leading integrated wealth management and professional services business, with approximately £44 billion in AuM and co-investments from Warburg Pincus and Permira
Larger:
- Tilney (UK): Acquisition of Smith & Williamson (September 2019)
Mid-sized:
- PGA & Banco Santander Totta (Portugal): Merger of asset management operations (April 2020)
- Credit Suisse Asset Management (Switzerland): Acquisition of AgaNola (March 2020)
- ARA Asset Management (UK): Acquisition of majority stake in Venn Partners (March 2020)
- Jupiter Fund Management (UK): Acquisition of Merian Global Investors (February 2020)
- Denge Varlik and Deren Varlik Yonetim (Turkey): Merger of asset management operations (January 2020)
- Amundi (Spain): Acquisition of Sabadell Asset Management (January 2020)
Smaller:
- Pacific Asset Management (UK): Acquisition of Parallel Investment Management (June 2020)
- Jupiter Fund Management (UK): Acquisition of Merian Global Investors (May 2020)
- Andbank (Spain): Acquisition of Degroof Petercam's Spanish private banking business (May 2020)
- Quintet Private Bank (Switzerland): Acquisition of Bellevue Group's wealth management business (May 2020)
- Fairstone (UK): Acquisition of Goodman Chartered Financial Planners (April 2020)
- Stonehage Fleming (UK): Acquisition of investment management activities of Cavendish Asset Management (April 2020)
- Ascot Lloyd (UK): Acquisition of Ring Associates (April 2020)
- Rathbone Brothers (UK): Acquisition of Barclays Wealth Management (April 2020)
- Capitalworks PEP (South Africa): Acquisition of Peregrine Holdings (March 2020)
- Hauck & Aufhäuser (Germany): Acquisition of Bankhaus Lampe (March 2020)
- Mattioli Woods (UK): Acquisition of Hurley Partners (March 2020)
- Ypsilon Capital (Greece): Acquisition of Attica Wealth Management (February 2020)
- AgioFunds TFI (US): Acquisition of 30% of Symphony Wealth Management (January 2020)
- eQ Asset Management (Finland): Acquisition of business of Best Global Ideas and European Small & Mid Cap (January 2020)
Differing FI prerogatives
Tag-out (disposals):
- Bellevue Group (Switzerland): Disposal of wealth management business (May 2020)
- Grupo Esfera (Spain): Disposal of Esfera Capital Gestion (March 2020)
- Attika Bank (Greece): Disposal of Attica Wealth Management (February 2020)
- Banco Sabadell (Spain): Disposal of Sabadell Asset Management (January 2020)
Tag-in (acquisitions):
- Singular Bank (Spain): Acquisition of MG Valores (June 2020)
- Andbank (Andorra): Acquisition of Esfera Capital Gestion (March 2020)
Tag-in (JVs):
- Investcorp (Bahrain): Establishment of JV with Tages, Investcorp-Tages (May 2020)
- BNP Paribas (France): Investment management integrated solutions JV with BlackRock's technology platform, Aladdin Provider (April 2020)
Fund platform M&A
- Netfonds (Germany): Acquisition of Easyfolio (June 2020)
- J.P. Morgan (China): Acquisition of remaining 49% of China International Fund Management (April 2020)
- Clearstream (Switzerland): Acquisition of 51.2% of UBS Fondcenter (January 2020)
Debt-servicing M&A
- DoValue (Greece): Acquisition of 80% of Eurobank Financial Planning Services (December 2019)
- Bogazici Varlik Yonetim (Turkey): Acquisition of Vera Varlik Yonetim (May 2020)
- Cerved (Italy): Acquisition of 50.1% of Quaestio Cerved Credit Management (February 2020)
Trust administration M&A
- Sanne (UK / Cayman Islands): Acquisition of Inbhear Fund Services and Inbhear Management Services (January 2020)
- Intertrust (UK): Acquisition of Wells Fargo Trust Corporation (January 2020)
- ZEDRA (Singapore): Acquisition of BNP Paribas Singapore Trust Corporation Limited (January 2020)
Direct lending M&A
- Bridgepoint (Sweden): Acquisition of EQT Partners' credit business (June 2020)
High investor appetite
Deal highlight:
White & Case advised Catella Group, a Sweden-based specialist in property investments and fund management, on its sale of 70% of fund manager Catella Fondförvaltning to Athanase Industrial Partner
Financial sponsors (acquisitions):
- Athanase Industrial Partner (Sweden): Acquisition of 70% of Catella Fondforvaltning (June 2020)
- Nordic Capital (Sweden): Acquisition of Max Matthiessen (May 2020)
- Bridgepoint (France): Acquisition of 20% of Cyrus Conseil (April 2020)
- AnaCap (UK): Acquisition of Wealthtime (February 2020)
- CBPE Capital (UK): Equity investment in Perspective Financial (January 2020)
Financial sponsors (WealthTech funding rounds):
- Major Oak: Participation in £7 million Series A funding round for Smarterly (May 2020)
- Fuel Ventures: Participation in £3 million Series A funding round for Capdesk (April 2020)
- PMV: Participation in €2 million Seed funding round for InvestSuite (April 2020)
SWFs (WealthTech funding rounds):
- GIC: Participation in US$107 million Series D funding round for Pagaya (June 2020)
Trade consolidators:
- City of London Investment Group: Acquisition of Karpus Management (June 2020)
- Natixis Investment Managers: Equity investment in Smart Pension (May 2020)
Foreign investors:
- Pinnacle Investment Management (UK): Equity investment in Aikya Investment Management (May 2020)
Market appetite:
- Ninety One (South Africa): £1.2 billion LSE and JSE IPO (March 2020)
Insurers:
- Prudential (China): Asset management JV with CITIC Group (April 2020)
New markets / business lines
- KBC (Belgium): Launch of everyoneINVESTED (April 2020)
- Vanguard (UK): Launch of UK investment advisory services (January 2020)
Digitalisation marches on
Established players believe in WealthTech:
- Refinitiv: Acquisition of Scivantage (March 2020)
- Deutsche Bank: Equity investment in Qplix (March 2020)
- Credit Suisse Asset Management: Acquisition of NorthPoint Technology (February 2020)
- FNZ: Acquisition of Irish Progressive Services International (February 2020)
- DWS Group: Acquisition of 24.9% of Arabesque AI (January 2020)
Established players partner with WealthTech:
- FNZ: Blockchain-enabled administration utility JV with FinSwitch (May 2020)
- Hauck & Aufhäuser: Wealth management partnership with Raisin (April 2020)
- Deutsche Bank: Extension of wealth management alliance with Avaloq (April 2020)
Innovation consortia:
- Clearstream, Credit Suisse Asset Management, Luxembourg Stock Exchange and Natixis Investment Managers: Collaboration on DLT-based platform for investment funds FundsDLT (March 2020)
Start-up support:
- Fidelity: Launch of Silicon Roundabout digital hub (January 2020)
Inorganic growth by WealthTech:
- Finantix: Acquisition of InCube (March 2020)
Click here to download Financial services M&A experiences shortness of breath in H1 2020 (PDF)
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