More than 100 hedge-fund M&A deals expected

Date: Wednesday, April 6, 2011
Author: Alistair Barr, MarketWatch

'Alternative' deals topped traditional transactions for first time in 2010

There may be more than 100 mergers and acquisitions this year involving hedge-fund firms and other so-called alternative asset managers, according to a report Tuesday by investment bank Freeman & Co.

Last year, there were 101 alternative M&A deals, more than double the 49 transactions that closed in 2009, Freeman said. Traditional manager deals, involving mutual-fund firms, totaled 85 in 2010, down 3% from 88 transactions in 2009, according to the investment bank.

Last year was the first in which alternative manager deals outpaced traditional manager deals, it noted.

“Alternative deals will continue to outpace traditional managers while total deal size is expected to surpass that of 2010,” Freeman said.

Hedge-fund deals are being driven by rising investment in the industry by institutions, along with growth in retail-oriented funds that use some of the tools of hedge-fund managers, Freeman said.

The number of long/short equity mutual funds has jumped from 19 to 104 in five years, the firm noted. Read about the rise of the ‘hedged’ mutual fund here.

“Alternatives continue to be a driver of M&A as institutional investors need products to close their funding gaps and mutual fund sponsors create suitable structures for the mass affluent to access these alterative products,” Eric Weber, chief operating officer at Freeman, said in a statement. “These robust trends will continue into 2012 and beyond.”