Alternatives Hunger Drives Money Management M&A Activity

Nov 15 2006 | 1:10pm ET

A surge in the number of mergers and acquisitions involving alternatives firms pushed global investment management M&A activities to within striking distance of its all-time high.

The 167 transactions—the most ever—have a total disclosed deal value of $20.1 billion, still well behind 2000’s $30.9 billion, with six weeks to go in the calendar year, according to Putnam Lovell NBF Securities. The total amount of assets acquired, however, has already hit a new high of $1.414 trillion dollars, and with big deals—such as Fortress Investment Group’s impending $750 million initial public offering—the deal value is set to rise substantially.

Of the total number of transactions, 46 involved alternative asset managers, shattering the record of 30 set last year. Of those, 32 involved hedge fund or fund of hedge funds managers.

“Private equity firms may be even more active in asset management transactions in the months ahead,” Putnam Lovell investment banking chief Stephen Pierson. “In addition, a maturing alternative investments segment is sure to yield more dealmaking between entrepreneurial firms and talent-hungry financial services companies.”

Some of the year’s more notable alternatives deals include Morgan Stanley’s busy October, when it shelled out almost $30 million for FrontPoint Partners and stakes in Landsdowne Partners and Avenue Capital Partners, the $9 billion management buyout of Black Diamond Capital Management, and Credit Suisse’s $4 billion acquisition of Ospraie Management.

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