As the UK economy improves, many experts predict a rush of merger and acquisition (M&A) activity as companies look to utilise the cash they have been hoarding on their balance sheets since the financial crisis.
Figures from the Office for National Statistics, however, suggest that the number of M&A deals involving UK companies in the second quarter of the year “remained historically low”. It counted 37 domestic acquisitions – UK companies acquiring other UK companies – compared to 39 in the first quarter.
Meanwhile their were 19 acquisitions of UK companies by overseas businesses – inward acquisitions – and just 17 outward acquisitions where UK companies bought an overseas business.
By these figures it would seem the asset management industry has seen more than its fair share of M&A activity in the past 12 months.
So far Aberdeen has completed its acquisition of Swip, Standard Life Investments has purchased Ignis, The Bank of Montreal of Canada acquired F&C Asset Management and most recently Legg Mason announced plans to buy Martin Currie.
While this has pros and cons for shareholders in the various companies, a key question is what it means for investors in the funds run by these asset managers, especially the larger ‘flagship’ funds.
As Martin Gilbert, chief executive of Aberdeen, pointed out in August: “Really the duplication in fund management organisations, it will be no surprise to anyone, is within the fund management teams.”
With Aberdeen’s acquisition of Swip, all the equity managers from the acquired companies have departed, while teams have been strengthened and other managers replaced.
For example Steven Logan and Kevin Mathews, who had run the £1.7bn Swip High Yield Bond fund have been replaced by Greg Hopper, head of the global high yield strategy based in New York. Mr Mathews has since left for Aviva, while Mr Logan has become head of European high yield at Aberdeen.
But while there are some new faces post M&A activity, there are some who have remained in place. Gerry Ferguson, who has managed the £3.1bn Swip Property trust since launch in 2004, stays as manager, although as part of the integration between the companies Tim Sankey has become a member of the senior management team on the fund alongside James McLean and Mr Ferguson, which has allowed Kerri Hunter to focus on managing another pooled property fund.
Meanwhile on the fixed income side, Aberdeen suggests the acquisition has resulted in a “significantly enhanced and strengthened UK and European fixed income platform”. Roger Webb remains manager of the £1.4bn Swip Corporate Plus Bond fund and reports to Neil Murray, previously head of credit at Swip, who has become head of pan-Euro fixed income at Aberdeen.
SLI has also seen a turnaround in managers following its acquisition of Ignis, including new faces at its £229.1m Corproate Bond fund, previously run by Chris Bowie, the £94.4m UK Equity Income, £76.8m European Smaller Companies and £135.5m Balanced Growth fund.
Although some of Ignis’s larger funds, such as the £1.3bn Ignis UK Property fund run by George Shaw remain unchanged.
