Private Fund Sponsor M&A Could Take Off in 2024

Acquisitions of private fund sponsors can be accretive for large asset managers, providing access to attractive investment strategies with equally attractive margins, which can be deployed in new ways on larger platforms. For sellers, one significant attraction has been the ability to drive value through unlocking access to improved global distribution and new product sectors. 2023 may have been a surge, but even the first two months of 2024 seem like a tidal wave.

Consolidation was a major theme for asset managers in 2023. Despite a volatile year for dealmaking in the private funds sector, leading to a rather soft Q1 last year, more deals hit the news as the year progressed. It all culminated in a busy summer with several major deals emerging with private funds acquiring, or being acquired by, other asset managers. Some of the more notable deals included:

• Manulife Investment Management acquired multisector alternative credit manager CQS from billionaire Michael Hintze in November. Upon completion of the deal, Manulife will acquire the CQS credit platform and CQS brand, which is currently one of the best-known names in alternative investing. The deal adds around $13.5 billion in AUM to Manulife’s already healthy coffers, which currently sit at around $618 billion.
• Mercer Global Advisors acquired Private Asset Management in August, adding more than 600 clients to its roster. Only a day later, Mercer acquired Steward Wealth Management, bringing in another 340 clients. In total, both deals brought in approximately $1.4 billion in AUM to the more than $34 billion already managed by Mercer.
• Allianz agreed to sell its 49% ownership stake in CPIC to China’s Guotai Junan Securities in October. The sale was part of Allianz’s strategy to focus primarily on its wholly owned AM activities in China. Financial details were not disclosed.
• UBS Group acquired Credit Suisse in a share exchange deal that saw Credit Suisse shareholders receive one UBS share for every 22.48 Credit Suisse shares held. The combined entity is operating as a consolidated banking group.
• Indosuez Wealth Management, a subsidiary of the Crédit Agricole group, acquired a majority stake in Degroof Petercam, a Belgium-based independent family group with $77 billion in AUM. The deal bolsters Crédit Agricole’s presence in Belgium, creating a pan-European leader in wealth management.
• Connecticut-based asset manager Conning Holdings was acquired by Generali on July 6 as part of a partnership with Cathay Life. The deal involved no upfront cash and instead gave Cathay a 16.75% stake in Generali. Additionally, Cathay entered into a minimum 10-year agreement with Generali’s expanded asset management business. The acquisition brings Generali’s total AUM to $845 billion.

In 2024, the deals keep coming and the consolidation continues, starting with Alger’s Jan. 4 purchase of Redwood. Once completed, the deal will add $1.6 billion to Alger’s AUM and will set up Redwood as a wholly owned subsidiary. This was followed shortly thereafter by BlackRock’s Jan. 12 acquisition of Global Infrastructure Partners. The deal saw the asset management giant pay $3 billion in cash and around 12 million shares for the world’s largest independent infrastructure manager. These two deals appear to be just the tip of the iceberg, as experts predict the consolidation trend to continue not just into 2024 but beyond. PwC’s 2023 Global Asset and Wealth Management Survey revealed that nearly three-quarters of asset managers (73%) are considering consolidation with another asset manager. Additionally, the survey predicts that, by 2027, one in six asset and wealth managers globally will be consumed or fade away — although they did not give odds on which way most would go.