An overview of the UK fund management industry Presentation made by IMAS Corporate Finance to a delegation from the Asset Management Association of China 16 September 2013 IMAS Corporate Finance Unrivalled expertise in selling financial services businesses
1. Introducing IMAS and IMASinsight 2. UK Fund Management Industry IMAS S Corpora rate te Finance Unrivalled expertise in selling financial services businesses 2
Leading M&A advisory firm in the UK financial services Independent advice, backed by strong focus and culture, brings results for our clients Our focus Our results ts We provide independent M&A advice, exclusively focused in the UK financial services sector, sale to sale to sale to sale to sale to sale to sale of sale to typically in the £5m-£100m enterprise value range Croton Stokes Wilson To management sale to sale to sale to sale to sale to sale to sale to sale to Our cultu ture Berkeley Burke Wilby management management Focus on developing long-term client relationships sale to sale to sale to sale to sale to sale to sale to sale to Blue Oar Securities, renamed Typically engaged 12-18 months ahead of any CGA now UKWM ‘process’ Enables better understanding sale to sale to sale to sale to sale to sale to sale to sale to Dedicated senior level attention Partners typically from ‘bulge bracket’ investment sale to sale to sale to sale of Robert Fleming sale to sale to sale to sale to banks Benefit Consultants Ltd to Partners involved in day-to-day execution / client mgmt Knowledge leadership Complete up-to-date mapping of the industry and market dynamics (sources: FSA, Companies House) Experience and insight into key industry / sector issues Shared goals Provision of independent conflict-free advice All partners participate in profits and equity IMAS S Corpora rate te Finance Unrivalled expertise in selling financial services businesses 3
IMASinsight – proprietary ‘mapping’ 100% of the UK FS industry Unique tool able to assist buyers and sellers alike Hard data Soft intel telli ligence Companies House data FCA Registe ter Text-Bas ased Knowledge Web d developme ments ts • Over 78,000 companies • Over 130,000 entities • Over 32,000 news items • Registered users • Over 10,000 groups • Over 350,000 people • Over 7,500 meeting notes • Monthly snapshot Better Informed • Years of developme ment 15 15 • Groups mapped 10,000 • CH & FCA matching 45,000 • Sector / activity classifications 35,000 Better Advice Sellers llers Buyers rs Unparalleled identification of potential buyers Perfect buyside tool Includes all overseas investors in UK FS Whole of market proposition Ability to identify all targets that match buyer’s Increasingly attracting other overseas investors interested in UK FS criteria IMAS S Corpora rate te Finance Unrivalled expertise in selling financial services businesses 4
IMASinsight possible because company information is highly transparent Companies House FCA Register (www.companieshouse.gov.uk) (www.fca.org.uk/register) All companies have to file, available for All companies with Financial Services sector inspection by the public, the following need to be authorised or registered and information: individuals approved Financial Results Companies Profit and Loss Date of authorisation Balance sheet Allowed activities Explanatory notes Numbers of approved persons Other details Approved Persons Directors with dates of birth Functions approved for Shareholders and number of shares held Full history of approvals IMAS S Corpora rate te Finance Unrivalled expertise in selling financial services businesses 5
IMASinsight analysis is summarised and available on the web Ownership analysis Groups analysed by type of control and indicative size (market value) Source: IMASinsight …and by domicile of parent for overseas owned groups Source: IMASinsight IMAS S Corpora rate te Finance Unrivalled expertise in selling financial services businesses 6
IMASinsight analysis is summarised and available on the web M&A activity is tracked c. 25 M&A deals per quarter being completed with increasing levels of activity in 2013 as confidence returns Source: IMASinsight Overseas acquirers and private equity funds have been the most active Source: IMASinsight Source: IMASinsight IMAS S Corpora rate te Finance Unrivalled expertise in selling financial services businesses 7
1. Introducing IMAS and IMASinsight 2. UK Fund Management Industry IMAS S Corpora rate te Finance Unrivalled expertise in selling financial services businesses 8
The UK Fund Management Industry Source: IMASinsight • IMAS insight analyses the UK financial services sector into around 100 sector/activities • Above is the analysis for the UK fund management industry IMAS S Corpora rate te Finance Unrivalled expertise in selling financial services businesses
Fund management is the most important segment Overview of financial services businesses The UK financial services sector is (2,990 groups) dominated by investment businesses, with General Insurance over 50% of the market (defined as groups 21% with a capital value in excess of £5 million) Investment 50% Lending 16% Financial support services 13% Source: IMAS-insight Overview of the investment sector (1,497 Within the investment sector, 21% groups) of businesses are fund managers Other Fund 20% followed by: Manager Private 21% Client • Hedge funds 16% Wealth Manager 5% • Private equity 15% IFA Business Hedge Fund 6% 16% Corporate Finance 8% Private Stockbroker Equity 9% 15% Source: IMAS-insight IMAS S Corpora rate te Finance Unrivalled expertise in selling financial services businesses 10
Overseas companies major investor in fund management £100m+ fund management ownership structure Overseas ownership very significant Other • £100m+ 34% 3% Overseas UK Quoted Owned • £5m to £100m 35% 19% 34% Widely Held Typically overseas ownership is greater 10% in larger companies (ie £100m+) but not within UK fund management Privately Held 34% Source: IMAS-insight £5-100m Fund Management ownership structure Other UK Quoted 6% Overseas 3% Widely Held Owned 4% 35% Privately Held 53% Source: IMAS-insight IMAS S Corpora rate te Finance Unrivalled expertise in selling financial services businesses 11
The number of fund management entities have remained stable Authorised entities Fund Management The number of authorised fund management business has increased since January 2008 by 4% Source: IMASinsight All authorised entities The number of authorised entities has fallen by 19% over a similar period Source: IMASinsight IMAS S Corpora rate te Finance Unrivalled expertise in selling financial services businesses 12
The number approved persons in fund management The fall in numbers has been far more muted than the whole industry Fund Management The number approved persons in fund management has fallen 5% since the beginning of January 2008 Source: IMASinsight All authorised entities For the whole industry the number of approved persons has fallen by 13% over the same time period Source: IMASinsight IMAS S Corpora rate te Finance Unrivalled expertise in selling financial services businesses 13
M&A activity significant but less than industry average M&A activity as a percentage of the whole market By volume: 7% By value 7% Given the fund management industry makes up 10% of the whole FS sector, M&A activity Source: IMASinsight is somewhat lower than might be expected Reflects fund management businesses can be set up rather than acquired Source: IMASinsight IMAS S Corpora rate te Finance Unrivalled expertise in selling financial services businesses 14
Overseas firms are the most active acquirers Volume of deals completed Q1 2011 to Q2 2013 by buyer type All overseas buyers had an Other Private existing UK operations 5% 11% Private Equity Overseas Owned 30% 39% UK Quoted 15% Source: IMASinsight The investment is largely by American companies Source: IMASinsight IMAS S Corpora rate te Finance Unrivalled expertise in selling financial services businesses 15
Level of overseas ownership in financial services Industry context UK financials services industry highly international 46% of groups with value in excess of £100m are overseas owned The City of London retains its foremost position in international financial services Accessing fund management expertise For fund management companies worth in excess of £100m overseas ownership 34% Don’t need to own a fund management business to access its expertise However, many do hence the significant level of overseas ownership Overseas owned fund managers are investing further into the UK fund management industry as the most active acquirers IMAS S Corpora rate te Finance Unrivalled expertise in selling financial services businesses 16
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