Magazine article Global Finance

The Americas: US Asset Managers Sell at Hefty Premiums

Magazine article Global Finance

The Americas: US Asset Managers Sell at Hefty Premiums

Article excerpt

Asset management firms are hot properties, judging by the multiples of earnings paid last year for the 108 announced mergers and acquisitions in the industry.

"The wealth management market in the United States is particularly attractive," says John Temple, managing director of Cambridge International Partners, a New York-based investment bank. "The major asset management companies are looking to establish platforms to serve affluent investors,"Temple says. "There are very few platforms of sufficient scale available for acquisition.Thus, prime properties are commanding high multiples," he says.

The value of last year's asset management mergers totaled $31 billion, up from $13 billion a year earlier, according to data compiled by Cambridge International and Merrill Lynch.These data do not include Chase Manhattan's $35.2 billion purchase of JT Morgan, which is not considered to be a pure asset management deal. Nor do they include the $6.8 billion that Chase paid for London-based Robert Fleming Holdings.

Financial services companies seeking a global presence are willing to pay big prices for asset managers with strong distribution platforms,Temple says. Many of last year's biggest deals were by European money managers seeking client bases in the United States.

Milan-based UniCredito Italiano paid an eyepopping 29.9 times earnings before interest and taxes and amortization for Boston, Massachusettsbased Pioneer Group, one of the few remaining large US mutual fund platforms up for sale. "UniCredito has enjoyed high growth in the mutual fund market in Italy and is going global,"Temple notes.

Pioneer, one of the oldest asset managers in the United States, will be merged with UniCredito's Europlus to create a global asset management firm. …

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