Transaction volume in the global asset management industry in the first quarter of 2010 declined significantly from 2009, however, according to Jefferies & Co.'s Financial Institutions Group, M&A involving managers of alternative strategies and independent firms is on the rise.

A record level of over 50% of Q1 2010 global asset management transactions involved acquisitions of alternative managers. In Q1 2009, transactions involving alternative managers represented approximately 25% of the total deal volume, owing to concerns stemming from the turbulent capital markets at the end of 2008 and early part of 2009. Prominent examples of alternative transactions in Q1 2010 include Affiliated Managers Group's acquisition of Pantheon Ventures, Religare Enterprises' acquisition of Northgate Capital, Aberdeen Asset Management's acquisition of RBS Asset Management's Investment Strategies fund of funds division, and Shumway Capital Partners' sale of a minority stake to Goldman Sachs' Petershill Fund.

"The slack tide of the first quarter's M&A activity will begin to flow again as improved markets bring both buyers and sellers back to the negotiating table. Alternative asset management businesses continue to be among the most sought after targets based on their expected future growth," said Aaron Dorr, a New York-based managing director within Jefferies' Financial Institutions Group.

Deal volume in the January to March 2010 period totaled 25, compared with 38 announced transactions in the first quarter of 2009. Managed assets transacted declined substantially to $210 billion from $1.1 trillion a year earlier, which included the $840 billion merger of Crédit Agricole Asset Management with Société Générale Asset Management. Disclosed deal value climbed to $1.9 billion from $354 million in the first quarter of 2009.

Also on the rise in 2010 are cross-border transactions, which represented 24% of all deals in the first quarter of 2010, up from 11% in the year-earlier period. While cross-border and alternative transactions are increasing, divestitures – the most prevalent theme in 2009 – are beginning to subside. Divestitures made up 44% of M&A activity in Q1 2010, down from 50% in the year-earlier period and 56% for full-year 2009.

The largest global asset management transactions announced in the first quarter of 2010, by assets under management, were:

* Janus Capital Group's acquisition of an additional 3% of INTECH Investment Management, bringing its ownership to 95% ($48 billion AUM).
* Affiliated Managers Group's purchase of a majority stake in Pantheon Ventures from Russell Investments ($22 billion AUM).
* Aberdeen Asset Management's acquisition of RBS Asset Management's Investment Strategies fund of funds division from Royal Bank of Scotland ($22 billion AUM).
* Investec's purchase of the remaining 53% of Rensburg Sheppards it did not already own ($18 billion AUM).
* Affiliated Managers Group's acquisition of Artemis Investment Management from Fortis Bank ($16 billion AUM).