The survey found 90% of respondents expect to see an increase in M&A activity largely due to asset management firm’s plans to expand into Europe, Asia and South America. According to the survey, 45% of firms already have in place cross-border plans, while 42% are considering expansion into these regions.
Bob Kneip, chief executive officer of KNEIP said: “Having been through one of the worst financial crises in recent history, it is encouraging to see the European asset management industry is looking ahead more confidently to the next 12 months. Asset managers are expected to grow by acquisition and many companies already have firm plans for expansion.”
KNEIP, which provides fund administration services to investment companies, said its own corporate actions confirms this trend. It said in the first two quarters of this year it had already recorded 19 instances of M&A activity in the industry, a four-fold increase on the five recorded in the same period last year.
“The anticipated M&A activity can largely be attributed to growing demand for Ucits products around the world, which have become associated with excellence and strong supervision,” said Kneip. “It is the only truly globally distributed investment fund product, with demand from Asia now particularly strong.”
Furthermore, added Kneip, Latin America has also accepted Ucits as providing a stable, high quality, well regulated investment product and countries such as Peru and Chile have already started using the structure.
In light of many firm’s international expansion plans, the survey also found 95% of asset managers believe it is either ‘important’ or ‘very important’ to maintain a local point of contact for investors. Consequently, the industry says investor communication should be one of the top three considerations for investors selecting asset managers, alongside absolute return and investment strategy. Risk strategy, distribution network and TER were also cited as determining factors.
In addition to increased M&A activity, the study found 65% of respondents expect to see more international fund consolidations while 40% expect to see an increase in fund consolidation domestically.
“The industry is reorganising itself," said Kneip. "While many asset managers have ambitious expansion plans, they are also looking to streamline operations by consolidating funds domestically and internationally."
“Until Ucits IV comes into force, international consolidation is only available to investment companies but, as from July 2011, all type of Ucits funds will be able to merge on a domestic and cross-border basis. It is therefore likely this trend will continue well beyond the next 12 months as asset managers take advantage of this benefit under the new regulation.”