At the halfway point of the year, PwC’s mid-year outlook has found pressure for consolidation continues to drive M&A in financial services.
The professional services firm’s Global M&A Trends in Financial Services: 2025 Mid-Year Outlook found deal values in the first half of the year increased 15 per cent compared to the same period a year ago.
There are 10 megadeals – classed as those greater than US$5 billion ($7.7 billion) – in the six-month period compared to six previously.
Most deal activity is being driven by the push for economies of scale, digital transformation of businesses and repositioning their firms into new markets and products to attract greater assets under management, it said.
Asset and wealth management saw a 5 per cent increase in deal volumes during the half, while both the banking and capital market and insurance sector saw lower deal volumes.
In asset management specifically, PwC said there are three areas which are seeing the most M&A activity: acquiring the investment management businesses of insurance companies, acquiring companies that service asset managers such as data analytics or software firms, and acquiring companies that will add to their existing capabilities.
“Asset managers continue seeking to acquire the investment management businesses of insurance companies, either by acquiring the asset and wealth management business directly or by acquiring the entire insurance company.
“Companies that service asset managers, including those that provide data analytics, software, accounting or other services, have been a focus of M&A activity.
“Finally, asset managers are acquiring companies that will add to their existing capabilities or businesses, including private debt, infrastructure, ESG and cryptocurrencies.”
In March, asset manager BlackRock completed its acquisition of private markets research house Preqin to create a private markets technology and data provider. In May, alternative asset manager MA Financial acquired real estate investment manager IP Generation for $90.4 million and MA said it expects the deal to “generate significant synergies and scale efficiencies”.
Most recently, responsible fund manager Perennial Partners announced it had taken a majority stake in Melior Investment Manager, another responsible fund manager.
There are also ongoing talks between Platinum Asset Management and long/short manager L1 Capital about a possible merger to create a $18bn fund manager.
Looking ahead into the second half of the year, the business consultancy has mixed feelings about how the recent market volatility may impact future deals. On one hand, it may present an opportunity while other potential bidders may be deterred by the uncertainties.
Christopher Sur, PwC’s global financial services deals leader, said: “The pressures on financial services players to adapt to changing competitive dynamics is underpinning deals across geographies and subsectors and outweighing the broader market uncertainties about the economic outlook and concern over tariffs which has created a more cautious investment approach.
“We also believe the current environment presents an opportunity for dealmakers to be proactive and take bold actions to shape their future. However, some dealmakers appear to have hit the pause button as they seek to obtain greater clarity over the current conditions.”
