Growth through acquisition for Australian managers

Australian asset managers see opportunities for industry acquisitions over the next year as they embark on a fundamental shift in business strategy to meet changing client demands in innovation, distribution and front office solutions, a State Street report has found. 

Australia’s deepening pool of superannuation assets has created strong local opportunities for merger and acquisition activity, with more than 77 percent of managers surveyed said they saw increased opportunity to make acquisitions over the next year. 

This compares with 57 percent of US-based managers and 90 percent of Japan-based managers, the report said. 

Local asset managers are also eager to diversify into overseas investments, with half of the 30 Australian respondents surveyed saying they plan to expand their business to new countries or regions over the next three years. This is despite almost two thirds saying distribution challenges have deterred them from investing more in otherwise highly attractive markets and forecasting regulatory risk will strongly increase over the next year.   

In Australia, more than anywhere else, managers believe the biggest drivers of growth over the next three years will be multi-asset solutions according to State Street head of asset manager sector solutions, Paul Khoury. 

He said investors want more tailored, fully serviced solutions and asset managers recognise that to move away from single asset products they will need to transform many aspects of their operating model. 

“While the more innovative managers are already doing this, others will need to embark on acquisitions within the industry to gain the skills, talent and tools to address their capability gaps,” Khoury said.