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Can Asset Managers Buy Their Way Into International Expansion?

by Corianna

Expansion in the retail banking industry and the asset management industry depend on the presence of the same conditions:

• An untapped or developing market
• The establishment of a regulatory environment
• A robust financial infrastructure

And, already, the local action is heating up in the banking sector. Take China's banking sector, for example. Firms like HSBC, Bank of America, Citigroup, RBS, and Newbridge Capital Ltd. have been buying up shares of Chinese banks.

Meanwhile, in the US, fund companies are becoming cheaper. According to a Bloomberg article two weeks ago, the valuation of asset management firms has dropped by over 35% since the second quarter of 2003. And, should Lehman, Wachovia, and National City Corp follow through on their threats to put their asset management businesses up for sale, the price of asset managers will probably drop even more.

What does this mean? Well, there's a silver lining to every cloud (or so I've been told) and it's looking like a buyers market for domestic asset managers. On September 8th Fund Action reported that Fifth Third Bancorp is selling its municipal bond funds to Federated Investors. Allianz is also apparently on the prowl for new acquisitions. If the trend spreads overseas, a golden opportunity may be taking form for asset managers looking to follow in the footsteps of internationally expanding retail banks.

Many firms with an appetite for international expansion are focusing their efforts on taking their own home-grown brands and products abroad. These firms should also keep a look out for:

• International acquisitions and investment opportunities
• Domestic acquisitions of brands or products particularly well suited for international markets

After all, the early bird always gets the worm; or so I've been told.