For institutions that have scale, the right product mix, burgeoning distribution channels and consistent investment performance and processes, there is a strong strategic rationale and financial reward for participating in the asset management business, according to a report by Standard & Poor’s. ‘The motivation of easy money, however, which has driven financial institutions to build up asset management services over the past decade is less compelling, as performance expectations are currently much more circumspect,’ said credit analyst Walter Pompliano. Despite the significant amount of mergers and acquisition activity over the past decade, the number of participants and the amount of funds available grew by 165 per cent from 1990, and the industry remains highly fragmented. Standard & Poor’s expects that strategic initiatives for the sector will continue to include acquisitions, disposals, alliances, further significant technology and infrastructure investments, as well as selected product line expansion and contraction. Notwithstanding the recent ratings trends there are no immediate threats to the outlook or ratings on the largest players due to the downcast returns, because most members of the Standard & Poor’s rating universe are deemed to have the franchise and scale necessary to support a viable long-term position in asset management.
A report by broking group Marsh examines the repercussions from the administration of the South Korean company, which filed for bankruptcy protection at the end of August.
Global research by C2FO suggests that smaller businesses are less concerned with the repercussions of Brexit and the upcoming US presidential election.
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Early-stage merger and acquisition deals in Asia-Pacific show nearly 10% year-on-year growth in recent months.