ASSET MANAGEMENT
Mergers shake up the rankings
The biggest asset managers are getting bigger as consolidation continues to transform the business. Our ranking of the top 250 asset managers based outside the US, compiled by InterSec Research Corporation, shows Japan’s Kampo and UBS of Switzerland ahead of the rest of the field
Mergers and acquisitions continue to transform the asset-management business, as the latest InterSec Research Corporation ranking of the largest 250 non-US asset managers shows. The table provides a snapshot of the industry at year-end 1998 and many of the most eye-catching changes from the year before – both in terms of managers’ positions in the ranking and the value of assets under management – are the result of industry consolidation. UBS rises from third to second position, leapfrogging Groupe Axa of France. In 1997, the old UBS had a total of $485.5 million under management. By the end of 1998, following consummation of the merger of Swiss Bank Corp and UBS, the new UBS had $1,144.5 billion under management, putting it closer to perennial ranking leader Kampo of Japan which had $1,685.4 billion under management at the end of 1998. In a recent interview with Euromoney, UBS chief executive Marcel Ospel underlined the bank’s appetite for expanding in private banking, an asset management-type business, both by building and through acquisition.
The numbers for assets under management among the top four institutions put them almost in a group on their own. Although third placed Axa’s recent acquisition of Guardian Royal Exchange (ranked 166 in this year’s table) for $5.6 billion is one of the largest insurance company acquisitions this year, it won’t have a huge effect on next year’s ranking, as it adds just $17.8 billion under management to Axa’s total of $655 million at the end of 1998.
Barclays Global Investors, a world leader in passive asset management, completes the top four. Like UBS and Axa it derives a large portion of its assets under management from outside Barclays’ home market of the UK. Although Kampo heads four Japanese insurers among the top-10 asset managers, it only manages domestic Japanese money, in common with most other Japanese names in the ranking. These giant Japanese institutions increasingly stand remote from the global asset managers that are striving to acquire assets from clients across the world.
Commercial Union is another big riser, up to 15 in 1998 from 27 in 1997, following its acquisition of General Accident last year. Leading Italian insurance group Generali has leaped up the rankings from 51 at the end of 1997 to 20 at the end of 1998, largely as a result of an acquisition spree. In 1998, it acquired German insurance group Aachner & Munchener (which had ranked 85 in the 1997 ranking) and it has also added on acquisitions of the French insurance companies, Proxima and GPA. Such is the pace of change in the European insurance sector that Generali is itself viewed as a potential acquisition target for another European insurance giant, Axa.
Large transatlantic deals are also likely to affect the rankings next year. Dutch insurer Aegon paid $9.7 billion for San Francisco-based Transamerica Corp earlier this year. Germany’s Allianz is one to watch. It acquired French insurer Assurances Générales de France in 1997 and has made some more modest acquisitions in Asia this year. This July, it announced that it had held exploratory talks with Pimco Advisors Holdings, one of the largest and best known bond fund managers in the US.
European asset management will be a rapidly growing and eagerly contested battleground in the years to come. The introduction of the euro has enabled, indeed forced, European investors to look for bond and equity investments beyond their national boundaries. And there is the ever-looming threat in Europe of an ageing population, worsening dependency ratios and inadequate state pension provision, all raising the prospect of greater saving.
This has led to increased competition between money managers, all scenting the chance for new business. International money managers from the UK and US have been calling on asset owners across Europe seeking mandates to manage non-domestic allocations. Domestic money managers are fighting back by building their own expertise in international asset management.
Not all changes in the annual rankings are entirely due to acquisitions. Société Générale has risen 20 places in the rankings, from 36 in 1997 to 16 in 1998, partly reflecting its acquisition of Yamaichi’s fund-management activities in Japan last year, partly also the strong performance of its new SGAM UK operation in winning mandates from UK pension fund and retail clients. Other changes may also be attributed to currency adjustments into the dollar, following a year in which the European currencies tended to fare strongly in the run-up to creation of the euro. That’s one trend that’s likely to be reversed when the 1999 rankings are published.
THE INTERSEC 250:
Click here for numbers 1-125
Click here for numbers 126-250
Methodology
All institutions have their headquarters outside the US. They are ranked by assets under management at year-end 1998, as outlined below. Figures for institutions that have merged since then are not combined.
Asset managers: refers to institutions that have third-party assets under discretionary management.
Insurance companies: figures are shown for insurance reserves and, where applicable, third-party assets under discretionary management.
Pension funds: refers to funds where the majority of assets are internally managed.
Unit trust managers: figures are shown for total fund assets under management.
The ranking excludes all assets over which managers do not have full discretion, such as advisory or custodial relationships.
The types of institution ranked are banks (BK), independent asset managers (IM), insurance companies (IN), internally managed private and public pension funds (PF/PPF) and unit trust/mutual fund companies (UT). Other institutional investors such as venture capitalists, stockbrokers and central banks are excluded.
Assets of subsidiaries, both domestic and foreign (including the US), are included in the assets of the parent company. Some figures are estimated by InterSec and have not been verified by the institution concerned.
InterSec Research Corp
InterSec Research Corporation provides research and consulting services relating to the structure and nature of the investment-management industry and related industries in over 50 countries. For further information about this listing or other services, please contact Ian Toner at InterSec Research in London on +44 171 287 3898 (telephone), 287 3895 (fax) or e-mail ian@intsec.com.
