Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Jupiter Asset Management is preparing to make acquisitions to expand its investment offering, as the fund industry grapples with customers withdrawing their money, lower revenues, and pressure on costs.
Matthew Beesley, chief executive, said Jupiter had built up a war chest which would fund a “bolt on” acquisition to broaden the company’s product range and customer base.
“We are very much on the look out for opportunities to supplement our existing investment management capabilities,” Beesley told the Financial Times. “I’m constantly on the lookout for new talent to join the business and whether it’s by a team lift-out or small, boutique acquisitions, we are very much open for business.”
His comments come as midsized companies, such as Jupiter, Abrdn, Artemis, and Liontrust, battle against outflows from funds run by managers, as investors continue to turn towards cheaper passive products. According to the Investment Association, retail investors withdrew £136mn from active funds in May, while passive funds attracted £2.1bn.
Vincent Bounie, a senior managing director at Fenchurch Advisory, said the industry’s challenges “will continue to be drivers of M&A”, as asset managers attempt to broaden their revenues to help offset pressure from costs. He said “the next phase” of mergers and acquisitions “will increasingly feature the maturing private markets sector.”
A number of asset managers have merged or been snapped up by rivals in recent years. Jupiter acquired Merian Global Investors in 2020 for £370mn, while Abrdn was the product of a merger between Standard Life and Aberdeen in 2017. Earlier this year, Liontrust approached its smaller London-based rival Artemis about a potential takeover, although early-stage talks did not progress.
Jupiter’s surplus capital has increased to £198.5mn — nearly four times the amount required by regulators.
The company manages just over £50bn, of which about £42bn belongs to individuals. But Beesley is seeking to expand the amount it manages on behalf of institutions.
“Absolutely we are looking for ongoing opportunities to bolster our institutional client base, so you should expect that everything we do will . . . appeal to both the institutional marketplace and also that retail marketplace,” he added.
However, Beesley ruled out a larger-scale acquisition with a rival. “Many investors in the asset management industry are sceptical about large defensive mergers.
“The ability for us to deploy . . . capital we’ve accumulated into acquisitions that bring new investment talent and don’t impact the cost base of this business — so really leveraging what we’ve already got — is really quite meaningful.”
The fund manager has also reduced costs under Beesley, who has shrunk staff numbers and merged funds. The company said in its half-year results on Friday that its costs had decreased by 2 per cent compared with the same period a year ago to £129mn.
While analysts applauded Jupiter’s cost cutting efforts, the departure of some of its key managers — including its long-standing UK equity fund manager Ben Whitmore — has fuelled most of the withdrawals from its funds over the first half, which suffered a net £3.4bn of outflows.
Wayne Mepham, chief financial and operating officer at Jupiter, warned that the company’s value funds managed by Whitmore could experience further outflows over the coming months until his departure near the end of the year.