Fund management companies in Brazil, Russia, India and China (BRIC) could become targets for mergers and joint ventures with European and North American financial institutions that want access to faster growing markets.
Deloitte, the business advisory firm, estimates that cross-border investment management M&A deals in developing and emerging markets totalled over GBP1bn in deal value since January 2011. According to Deloitte, investment M&A deals in emerging markets could be worth an additional GBP1bn by the end of 2013.
Baber Din, investment management M&A director at Deloitte, says: “As the investment management sectors in North America and Europe become increasingly competitive, emerging markets will continue to attract the attention of larger, stable investment managers who are looking to position themselves in new markets, either through acquisitions, investments or strategic partnerships.
“GDP in BRICs, worth about USD13trn, is forecast to expand to USD95trn by 2050 but markets, taxes and regulations vary widely between regions. In some jurisdictions the restrictions affecting foreign investment and ownership are complex, with Russia and China at the harder end of the spectrum, India in the middle and Latin America and South East Asia the most open.
“Differing distribution models locally, as well as the profile of the existing investment management sector can also make identifying the right targets or partners difficult. Companies must understand and manage these factors effectively if mergers or partnerships are to be successful.”