Jupiter Asset Management prepares to expand its investment offerings through acquisitions. The fund industry is currently facing customer withdrawals, declining revenues, and cost pressures.
Matthew Beesley, CEO of Jupiter, stated that the company has built a "war chest" to finance a "complementary acquisition" intended to expand the product range and customer base.
We are very keen to complement our existing investment management capabilities," Beesley told the Financial Times. "I am constantly looking for new talent for our company, and whether it’s a team lift-out or small boutique acquisitions, we are very open to deals.
These statements come at a time when mid-sized companies such as Jupiter, Abrdn, Artemis, and Liontrust are battling outflows from manager-run funds, as investors continue to gravitate towards cheaper passive products. According to the Investment Association, retail investors withdrew £136 million from active funds in May, while passive funds attracted £2.1 billion.
Vincent Bounie, Senior Managing Director at Fenchurch Advisory, said that the industry's challenges would "continue to be drivers of M&A" as asset managers seek to diversify their revenues to offset cost pressures. He added that "the next phase" of mergers and acquisitions would "increasingly encompass the maturing private market sector.
In recent years, several asset managers have merged or been acquired by competitors. Jupiter acquired Merian Global Investors for 370 million pounds in 2020, while Abrdn was formed from the merger of Standard Life and Aberdeen in 2017. Earlier this year, Liontrust approached its smaller London rival Artemis regarding a potential takeover, but the early-stage talks were not pursued further.
Jupiter's surplus capital has increased to £198.5 million — nearly four times the amount required by regulators.
The company manages a little more than 50 billion pounds, of which around 42 billion pounds belong to private clients. However, Beesley aims to increase the proportion of funds managed for institutions.
We are constantly looking for ways to strengthen our institutional customer base, so you can expect that everything we do will appeal to both the institutional and private markets," he added.
Beesley, however, ruled out a larger takeover with a rival. 'Many investors in the asset management industry are skeptical about large defensive mergers. The ability to use accumulated capital for acquisitions that bring in new investment talent and do not affect the cost base of this business — really leveraging what we already have — is truly significant.'
The fund manager has also reduced costs under Beesley, who has reduced staff numbers and merged funds. In its half-year results announced on Friday, the company stated that costs have decreased by 2 percent compared to the previous year, down to 129 million pounds.
Although analysts praised Jupiter's cost-cutting measures, the departures of some key managers — including the long-standing British equity fund manager Ben Whitmore — fueled most of the outflows in the first half, recording a net outflow of £3.4 billion.
Wayne Mepham, Chief Financial and Operating Officer at Jupiter, warned that the company's value funds managed by Whitmore could see further outflows in the coming months until his departure.
