Deal Review in Wealth Management, Banking, and Asset Management week July 1 to July 6th.
Overview
For this week’s update, I have decided to concentrate my analysis, and insight on announced transactions, as they relate to wealth management, asset management and private banking. Thematically, one of the conclusions that is evident is that many of the those buying assets are doing so to advance their integrated platform ambitions. In some situations, this is leading to a selective product, or service acquisition, while in others, it reflects a need to bring together scale and market exposure in a single transformative situation.
In the former situation, the buyer is generally in a stronger position to acquire the asset at a fair price or one that expresses the need for investment to generate value creation, while in the later, where real transformation is a possible pathway for more than one buyer, advisors are able to extract much more future value into the upfront price.
This week’s blog tries to analysis and dissect both outcomes for the benefit of those involved in both the direct execution process as well as key supporting actors.
Pending Deal
Under Discussion: HSBC exit from Private Banking & Asset Servicing in Germany (BNP Paribas and UBS possible buyers of different business lines.
Analysis / Beyond the fact that HSBC is clearly seeking to focus more and more of its attention on its APAC operations, this divestment, should it happen, also emphasizes the belief among some large FI firms that better ROI bets can be realized outside of Continental Europe, than within it.? We have noted of late that if businesses that already have a strong and diversified position in Europe are doubling down on their investment within the region, but for those who are abandoning their global ambitions, Europe seems to be the first region where there is strategic intent to exit.
Announced Deals
Fintel acquiring ThreeSixty from Abrdn
Analysis / Abrdn continues its effort to further rationalize its business lines, and it seems that beyond the wealth platform, its ambitions to build a full advisor technology and service platform around it are over. By contrast Fintel continues its own efforts to pursue creating a full advisory service capability, and thus adding a compliance platform that is used by around 15% of the industry to integrate into its ecosystem makes sense. It still isn’t exactly clear whether the end game of Fintel’s effort is to offer a legitimate alternative solution in the practice management arena to challenge Intelliflo or for the firm to potentially more directly follow the True Potential path, but at least the stock has been a market performer of late.
Blackrock Acquiring Preqin (Privately Owned)
领英推荐
Analysis / Blackrock had to outpay the financial information and reference data specialist to acquire Preqin, and as a result, if rumours are true overpaid by roughly 10% to win the final auction.? Preqin’s founders might have also been more attractive to the idea of being part of Blackrock than the others given the increasing investment and focus that is being put on risk, data, analytics by all of the largest asset servicing firms, as well as many of the global asset management players. Given of course the infrastructure that Blackrock already has in portfolio and deal management vis a vis, Efront and Aladdin, the acquisition and integration of Preqin as well as Colmore will solidify its ability to serve both the GP and LP (i.e. pensions and SWF) with capabilities that marry data, key technology solutions, and service capability.? It will be interesting to see how other players like Amundi, and State Street respond.
Utmost Intl Acquiring Lombard International (PE Backed)
Analysis / There is a lot of logic in this deal as it brings together two mid-sized scaled players that are operating in different offshore centres together, creating an organization that supports unit linked investment solutions in even more jurisdictions across Europe and the Middle East. Prior to the deal each of these organizations, for their particular types of “HNW” solutions would have been considered a significant counterparty in their own right, but now that total AUM is above ￡100bl, the scale, resilience, and solutions coverage across multi-jurisdictions become much more obvious, as does the ability to partner with organizations that have large international workforces.? It remains to be seen exactly whether Oaktree will be willing to support investment into a more complete operational and technical integration to drive real margin transformation, but if the commercial side can be effective in cross and upselling the enlarged portfolio, this has the potential to be a significant value enhancer.
Robinhood acquiring Pluto Capital (VC Backed)
Analysis / Of late there has definitely been renewed interest globally among neobrokers in the topic of investor engagement. This is evolving both in the context of both aligning investment strategies to client risk suitability, an area of increasing focus by regulators, as well as in the area of decision support, where AI is emerging as both a solution for engagement as well as for improved opportunity.?? Not all end clients usually appreciate investments into the platform of this nature, but with gen z and millennial investors use to interacting with recommendation engines, and increasingly seeking simplified advice and guidance, buying and integrating Pluto into a broader area like investment analytics and insights for Robinhood makes sense. While the firm continues to have its ups and downs, with this acquisition as well as that of Bitstamp, one can start to see what a next generation self/investment platform might end up looking like in its coverage, and capabilities.
Vivid Money acquiring Pile Capital (Start up)
Analysis / Vivid Money has continued its journey to enter into the SME market with the acquisition of Pile.? This acquisition provides an entry point for Vivid to expand its offering for SME businesses into treasury services, covering functional requirements such as foreign exchange, remittances, and capital management.? There are examples, such as Starling and Oaknorth in the UK where neobanks have built a bridge between personal banking and investment services, and business services to attract budding entrepreneurs and sole traders, and this seems to be theme that Vivid also believes is valid in the European markets where it operates.?? Large universal banks have generally struggled, due to legacy technology, operational and commercial structures to fully provide an integrated business and personal banking service, so Vivid’s decision to double down on acquiring an early stage solution provider that already understands the needs of SME in the treasury arena clearly makes sense.
Chime acquires Salt Labs
Analysis / Chime is getting itself deeper into the workplace and employee benefits with the acquisition of Salt Labs. It is also getting closer to very large employers who have a more flexible, and generally lower income workforce, and thus puts itself in a position to, in time, become a one stop shop for those that are in the workforce on a part/time basis by design or by availability.? Chime is at the early stages of developing a specific enterprise strategy aimed to partner with larger employers as a source of a number of innovative payment, savings, and rewards solution, and it seems like buying Salt Labs is seen as both an accelerant as well as offering an additional angle to take into the HR, Benefits, and Rewards area.
?
New Article on interesting acquisitions in banking, wealth, and asset management last week. https://www.dhirubhai.net/pulse/deal-review-wealth-management-banking-asset-week-july-roger-portnoy-yykhe