There will be a 90 per cent increase in international company merger and acquisition (M&A) activity in the asset management industry over the coming year, predict respondents in a KNEIP survey.

The research showed that 45 per cent of European asset managers and administrators questioned in the survey, which was conducted by the service provider to the asset management industry, have firm cross-border expansion plans in place, and 42 per cent are already looking at international expansion into Europe, Asia and Latin America in response to an anticipated increase in investor interest from those regions.

“Having been through one of the worst financial crises in recent history, it is encouraging to see that the European asset management industry is looking ahead more confidently to the next 12 months,” commented Bob Kneip, chief executive officer of KNEIP. “Asset managers are expected to grow by acquisition and many companies already have firm plans for expansion.”

Data from KNEIP’s corporate action information confirms this, with 19 M&As recorded in the first two quarter of 2010, compared to just five over the same period in 2009.

“The anticipated M&A activity can largely be attributed to growing demand for UCITS products around the world, which have become associated with excellence and strong supervision. It is the only truly globally distributed investment fund products, with demand from Asia now particularly strong.”

The importance of maintaining a local point of contact for investors is recognised by 95 per cent of participants, and the industry says that investor communication should be one of the top three considerations for investors selecting asset managers. Absolute return and investment strategy must also be considered, as well as risk strategy, distribution network and TER.

“Our survey shows the industry is learning vital lessons from this crisis. Investors are demanding greater information provision and less complexity. Consequently for asset managers, factors such as transparency, local involvement, investor communication and education rank much higher in importance today than in pre-crisis times. If they respond to this demand appropriately, we are confident that this will help to drive a more reputable and sustainable investment market going forward,” Kneip added.

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