FOR IMMEDIATE DISTRIBUTION
in the Second-Half of 2009 as Capital Market Stresses Recede
Themes that were dominant in the first-half of 2009 - such as divestitures by larger financial institutions needing to shore up their capital base, pure-play asset managers seeking to add scale, fill product gaps, add talent, and expand product offerings at attractive prices, and private equity firms drawn to the industry's growth and profit potential and low capital requirements - will continue to play an outsized role in the latter half of the year, according to Jefferies Putnam Lovell.
To be sure, investment management industry deal volume in the first-half of 2009 was lower than in the year-earlier period, with only 72 announced transactions, against 109. Without the June blockbuster BlackRock purchase of Barclays Global Investors - the biggest ever by assets under management at $1.5 trillion, and second-largest by deal value at $13.5 billion - the tally for deal value and managed assets transacted would have been far lower. With BlackRock/BGI, total deal value was $14.1 billion in the first-half of 2009, while managed assets transacted totaled $2.3 trillion. The comparable totals a year earlier were $7.7 billion in deal value and $588 billion in assets under management changing hands. Notably, the median deal size was under $1 billion of assets under management transacted for the first six months of 2009, marking the first time since the 1990s that the median transaction size fell below $1 billion in a six-month period.
"We expect divestitures to remain the driving force in M&A activity through the second half of the year as the asset management industry faces its most radical reshaping on record," said Aaron Dorr, New York-based Managing Director at Jefferies Putnam Lovell.
Divestitures represented 47% of the deals announced in the first-half of 2009, and included three of the five largest transactions by assets under management. Divestitures represented 26% of the deals announced in the first-half of 2008. Cross-border deals fell sharply to 18% of the total from 33% in the first-half 2008, as cautious buyers were reluctant to stray from familiar home markets in search of targets without stronger indications that recovery was on the way. Transactions involving alternative investment managers, while down from the year-earlier period, still represented a respectable 28% of the total, against 37% in the first-half of 2008.
Deal volume in the second quarter of 2009 totaled 35, compared with 52 a year earlier. However, with BlackRock/BGI, assets transacted surged to $1.7 trillion, from $227 billion, while deal value jumped to $13.7 billion from $2.3 billion.
The largest transactions announced in the second quarter of 2009 in the global investment management industry, by assets under management, were:
- BlackRock's purchase of Barclays Global Investors.
- Aquiline Capital Partners' acquisition of Conning & Company.
- JPMorgan Chase's acquisition of an undisclosed remainder of majority-owned subsidiary Highbridge Capital Management.
- Woori Finance's purchase of Credit Suisse's 30% interest in joint venture Woori Credit Suisse Asset Management.
About Jefferies Putnam Lovell
Jefferies Putnam Lovell, the division of Jefferies & Company, Inc. focused on the financial institutions industry, offers a wide range of corporate advisory services, including mergers and acquisitions advice and capital raising. Jefferies Putnam Lovell's global client base is comprised of diversified financial services firms, institutional and mutual fund managers, alternative investment managers, banks, broker-dealers, insurers, and financial technology firms. Putnam Lovell was founded in 1987 and today operates from offices in New York, San Francisco, and London. Since July 2007, Putnam Lovell has been a division of Jefferies & Company, Inc., the principal operating subsidiary of Jefferies Group, Inc. (NYSE: JEF). For more information please visit www.jefferies.com/jpl
About Jefferies
Jefferies, an independent, full-service global securities and investment banking firm, has served companies and their investors for more than 45 years. Headquartered in New York City, with offices in more than 25 cities around the world, Jefferies provides clients with capital markets and financial advisory services, institutional brokerage, securities research and asset management. The firm provides investors with fundamental research and trade execution in equity, equity-linked, and fixed income securities, including corporate bonds, high yield bonds, US government and agency securities, repo finance, mortgage- and asset-backed securities, municipal bonds, whole loans and emerging markets debt, as well as commodities and derivatives. Jefferies offers companies capital markets, merger and acquisition, restructuring and other financial advisory services. Jefferies & Company, Inc. is the principal operating subsidiary of Jefferies Group, Inc. (NYSE: JEF: www.jefferies.com).
Contact:
Tom Tarrant, Jefferies & Company, Inc., 203 708 5989, ttarrant@jefferies.com
Desiree Maghoo, Jefferies International Ltd, 44 20 7029 8085, dmaghoo@jefferies.com
