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Private Equity Firms Set Their Sights on Asset Management
Attracted to Margins, Scale, High-Net-Worth Customers
August 24, 2008
Rather than acquire or invest only in companies seen as turnarounds, private equity firms are increasingly attracted to the strength and high-net-worth retail customer base of asset management firms, a category they traditionally have sidestepped, Dow Jones reports.
As Miguel Sagarna, a partner in the private equity group at KPMG, put it, “It’s a very scalable business, and it is a good quality product, it can grow fast with good margins.”
And with so many banks and asset management firms looking to raise capital by selectively selling off divisions, private equity firms are seeing this as a great opportunity to take advantage of good prices. Some are even planning to build broad financial services operations, said William Kirsch, chairman of the private equity group at Paul Hastings.
Certainly, private equity firms are looking to diversify their holdings, Sagarna agreed.
However, since most private equity firms closely guard their business, it is likely they will run any asset management firms they acquire alongside their business, experts said. That does not mean that they may not still share information and research, Kirsch said.
Asset management firms might even help private equity shops develop new products, added Adam Schneider, a principal at Deloitte.
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