Firms' hunt for ready money makes asset-manager M&A brisk in third quarter. Divestitures by multi-channel financial firms against a backdrop of increasing credit constriction fueled a jump in asset-manager M&A activity in the third quarter of 2008, according to preliminary data out of putnamlovell.com Jefferies Putnam Lovell (JPL).

"Consistent with the broader financial-service industry, the asset-management sector is quickly reshaping,'' says JPL managing director Aaron Dorr."Tremors transforming the global financial landscape have served as a catalyst to asset-management deal flow."

Banks out, PE in

Worldwide, there were 69 asset-manager transactions announced in the third quarter of 2008; a 33% hike from the 52 deals done in the same period last year, says JPL. Assets under management that changed hands in thsese deals came to $1 trillion -- or more than three times the $300 billion total in Q3 2007. The total disclosed value of asset-management deals increased to $6.4 billion in the latest September quarter, up from $6.1 billion in the year-ago period.

Big deals like the sale of parts of Lehman Brothers, Allianz's takeover of Cominvest as part of a swap of its Dresdner Bank unit to Commerzbank, Fortis' purchase of more of Artemis Asset Management, a Lazard buyback from executives and Nippon Life's purchase of 5% of Russell Investments goosed the last quarter's numbers considerably.

In the short run, Dorr expects "more banks and other cash strapped financial institutions to retreat from owning money managers, private-equity firms to step up their growing involvement in the sector, and consolidation among hedge-fund companies and other alternative-asset managers as firms grapple with investor redemptions and lack of liquidity."

JPL provides investment-banking services to financial institutions. It is a division of Jefferies, a New York-based investment bank and institutional securities firm. -FWR

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