UK/GLOBAL - Any deal to sell Barclays Global Investors would lead to further industry consolidation, consultants say.
This is the last in a wave of consolidation operations that saw Société Générale sell its UK fund management arm to hedge fund firm GLG and Henderson acquiring New Star.
Inalytics founder and chief executive Rick Di Mascio said operations of this kind always happened at the bottom of the cycle. He said: "We are definitely going to see some more in the future."
Aon Consulting investment principal Yusuf Samad said market consolidation would not necessarily be positive for investment performance.
He said: "In large organization investment performance tend to suffer. There are too many competing priorities and people tend to be lost in them."
He also said when an acquiring company overpays for another, it might try to pass the cost to clients.
On the other hand, he said mergers imply also the possibility to reduce administrative and marketing costs.
However, he said: "This is more a benefit for companies rather than for clients."
Several experts pointed out the specific case of potential integration of BGI with Blackrock would bring together two very different businesses - as BGI is a passive manager, while Blackrock is an active manager.
T. Rowe Price Global Investment Service president and chief executive Todd Ruppert said each integration of businesses needed to be looked at on an individual basis.
He said: "Some mergers have improved performance and service delivery and some have not. However, most acquisitions destroy the culture of the individual company, on which it bases its service to clients. It just destroys a lot of positive things for clients."
Bfinance managing director and head of research and development Olivier Cassin said the trend in consolidation was driven by two key factors. He said: "Firstly, consolidation and the creation of very large managers, often through a "build-up" or acquisition strategy with a view of building multi-boutiques to compete with specialised boutiques in every segment of the market.
"Secondly, I also see it as development of a different product range by the main investment banks, with strategies often originally formulated by their trading desks."
Principal Global Investors head of institutional business in Europe Steve Holt said he did not believe a wave of mergers and acquisitions, which he considered a normal progression of the current situation, caused any impact on clients.
He said such consolidation activity would not result in reduced choice for clients and competitions among industry players.
The National Association of Pension Funds director of policy Julian Le Fanu said mergers and acquisition, despite being a "quite normal process", are always a matter of concern for trustees of pension schemes.
He said: "This is a people's business and schemes buy an approach which is associated with people. This is why M&A in the financial sector represent an ongoing concern for trustees."
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