Asset Management Valuation Quarterly Update

Transcription

1 Asset Management Valuation Quarterly Update Q A publication from PwC s Deals practice

2 Financial Services Industry Asset Management Valuation Quarterly Update Recent Market Developments & Trends Year to date through June 30, 2015, the S&P 1500 Asset Management & Custody Banks Index decreased by 1.4% as compared to the S&P 500 Index, which increased by 0.2%. The combined assets of the nation s mutual funds increased by $121 billion, or 0.7%, to $16.3 trillion in May, according to the Investment Company Institute s official survey of the mutual fund industry. US equity funds saw three months of continued net outflows in Q totaling approximately $56 billion, whereas international equity funds saw three months of consecutive net inflows during Q2 2015, totaling approximately $47 billion. Year to date through June 30, 2015, US equity funds have seen cumulative net outflows of approximately $57 billion with the cumulative return on the S&P 500 close to zero. International equity funds have seen cumulative net inflows of approximately $73 billion as the MSCI World Index has returned 2.1% year to date. 25,000 20,000 15,000 10,000 5, ,000 10,000 15,000 20,000 25,000 Domestic Fund Flows vs. S&P 500 Return 6.0% 4.0% 2.0% 0.0% 2.0% 4.0% 25,000 20,000 15,000 10,000 5, ,000 10,000 15,000 20,000 25,000 International Fund Flows vs. MSCI World Index Return 6.0% 4.0% 2.0% 0.0% 2.0% 4.0% 6.0% Domestic Equity Flows S&P Monthly Returns International Fund Flows MSCI World Index Monthly Returns Trading market data and transaction observations The market capitalization of 15 of the top 28 asset management companies listed below decreased in the second quarter of 2015, with an average decrease of 6.2%. Alternative asset managers outperformed diversified and mutual fund assets managers for the quarter, exhibiting an average increase in market capitalization of 4.2% as compared to a decrease of 0.1% for diversified fund managers and a decrease of 3.1% for the mutual fund asset managers, respectively. Year over year, the market capitalization of 14 of the 28 asset management companies increased, with an average increase of 3.2% observed. Within the diversified asset manager sub-sector, companies exhibiting the largest increase in market capitalization for the quarter included SEI Investments Co., Affiliated Managers Group, and Westwood Holdings, with quarter over quarter increases of 10.7%, 1.5% and 0.5%, respectively. Within the mutual fund managers sub-sector, 10 of the 12 companies had a decrease market in capitalization for the quarter, with only Diamond Hills Investment Group and Artisan Partners Asset Management showing increases of 26.4% and 2.2%, respectively. Within the alternative asset manager sub-sector, companies exhibiting the largest increase in market capitalization for the quarter included The Carlyle Group, Oaktree Capital Group, and Lazard, with quarter over quarter increases of 18.3%, 13.8% and 6.9%, respectively. In the second quarter of 2015, there were four transactions announced or closed within the asset management industry with deal values of $75 million or greater. The average enterprise value to EBITDA and price to earnings multiples based on publicly disclosed information were 17.0x and 18.2x, respectively. Top US Asset Management Constituents (1) Market Capitalization ($ B) EV / LTM EBITDA Price / AUM (%) Price / LTM Earnings Company 6/30/2014 3/31/2015 6/30/2015 6/30/2014 3/31/2015 6/30/2015 6/30/2014 3/31/2015 6/30/2015 6/30/2014 3/31/2015 6/30/2015 Diversified Asset Managers BlackRock, Inc Affiliated Managers Group Inc SEI Investments Co NA NA NA Legg Mason Inc OM Asset Management Limited NA NA NM 10.6 NA NA Virtus Investment Partners, Inc Westwood Holdings Group Inc Sub-Group Average Mutual Fund Managers Franklin Resources, Inc T. Rowe Price Group, Inc Invesco Ltd Eaton Vance Corp Waddell & Reed Financial, Inc Federated Investors, Inc Janus Capital Group, Inc Artisan Partners Asset Management Inc NM NM 28.5 GAMCO Investors, Inc Cohen & Steers Inc Diamond Hill Investment Group Inc Calamos Asset Management Inc Sub-Group Average Alternative Asset Managers The Blackstone Group L.P NA NA NA KKR & Co. L.P NA NA NA Lazard Ltd NA NA NA Apollo Global Management, LLC NA NA NA NM Oaktree Capital Group, LLC NM NM NM Och-Ziff Capital Management Group LLC The Carlyle Group LP Fortress Investment Group LLC Ares Management, L.P NM NM NM NM Sub-Group Average Average 10.7x 10.4x 10.1x x 21.5x 19.1x Median 11.3x 10.4x 9.8x x 18.9x 18.6x Second Quarter Transactions in the Asset Management Industry (1) Acquirer Target Natixis Global Asset Management, S.A. DNCA Finance Towry Finance Company Limited Ashcourt Rowan Plc Poste Italiane S.p.A. Anima Holding S.p.A (BIT:ANIM) CPPIB Credit Investments Inc. GE Antares Capital Close Announce Purchase Price ($ M) P/AUM (%) EV / EBITDA Price / Earnings 6/30/2015 2/19/ NA NA NA 5/8/2015 2/2/ x NA - 4/15/ x 18.2x - 6/9/ ,000.0 NA NA NA Average x 18.2x (1) Market data provided by Capital IQ, Inc. (2) Transaction data provided by Capital IQ, Inc. Selection criteria: (i) Target is a participant within the asset management industry, (ii) transaction was announced or closed between 4/1/2015 and 6/30/2015, (iii) total transaction value is greater than $75 million, and (iv) Percent sought is greater than 50%.

3 Financial Services Industry Asset Management Valuation Quarterly Update (continued) Top Asset Management Constituents by Geography (1) Company Market Capitalization ($ B) EV / LTM EBITDA Price / AUM (%) Price / LTM Earnings 6/30/2014 3/31/2015 6/30/2015 6/30/2014 3/31/2015 6/30/2015 6/30/2014 3/31/2015 6/30/2015 6/30/2014 3/31/2015 6/30/2015 United States Affiliated Managers Group Inc Apollo Global Management, LLC NA NA NA NM Ares Management, L.P NM NM NM NM Artisan Partners Asset Management Inc NM NM 28.5 BlackRock, Inc NA NA NA Calamos Asset Management Inc Cohen & Steers Inc NA NA NA Diamond Hill Investment Group Inc Eaton Vance Corp Federated Investors, Inc Fortress Investment Group LLC Franklin Resources, Inc GAMCO Investors, Inc Invesco Ltd Janus Capital Group, Inc KKR & Co. L.P NA NA NA Lazard Ltd NA NA NA Legg Mason Inc Oaktree Capital Group, LLC NM NM NM Och-Ziff Capital Management Group LLC OM Asset Management Limited NA NA NM 10.6 NA NA SEI Investments Co NA NA NA T. Rowe Price Group, Inc The Blackstone Group L.P NA NA NA NA NA NA The Carlyle Group LP Virtus Investment Partners, Inc Waddell & Reed Financial, Inc Westwood Holdings Group Inc Sub-Group Average x 10.4x 10.1x x 21.5x 19.1x Australia Argo Investments Limited NA NA NA Australian Foundation Investment Company Limited NA NA NA BKI Investment Company Limited NA NA NA BT Investment Management Limited Magellan Financial Group Milton Corporation Limited NA NA NA Platinum Investment Management Limited Sub-Group Average x 20.3x 19.7x x 24.3x 23.6x Canada AGF Management Limited Brookfield Asset Management Inc NA NA NA CI Financial Corp Fiera Capital Corporation Gluskin Sheff + Associates, Inc Sprott Inc NM NM Sub-Group Average x 13.5x 12.3x x 20.8x 19.4x Hong Kong Value Partners Group Ltd x NM 26.7x x 16.1x 27.0x Japan SPARX Group Co., Ltd x 16.7x 19.9x NA NA NA 29.2x 37.8x 35.1x United Kingdom Aberdeen Asset Management PLC Alliance Trust PLC NA NA NA Ashmore Group PLC Caledonia Investments plc NA NA NA Henderson Group plc Jupiter Fund Management Plc Man Group plc NM Polar Capital Holdings plc RIT Capital Partners plc NA NA NA Schroders plc Sub-Group Average x 9.7x 9.4x x 15.4x 15.3x Switzerland GAM Holding AG Partners Group Holding AG Sub-Group Average x 16.8x 16.2x x 20.2x 19.5x South Africa Coronation Fund Managers Limited x 12.6x 11.2x x 17.2x 15.2x Singapore ARA Asset Management Limited NA NA NA Keppel Infrastructure Trust NA NA NA NM NM NM Sub-Group Average x 14.5x 19.7x NA NA NA 20.0x 15.6x 16.7x South America Tarpon Investimentos S.A x 15.8x 13.5x NA NA NA Average x 12.7x 12.6x x 21.1x 19.7x Median x 12.5x 11.7x x 19.2x 18.9x (1) All financial data obtained from Capital IQ.

4 Financial Services Industry Asset Management Valuation Quarterly Update (continued) Purchase Price Allocation Benchmarking - Transactions in the Asset Management Industry (1) Allocation of Purchase Price As a Percentage of Excess Consideration (2) Target Closing Purchase Price ($ MM) Goodwill Total Intangible Assets Trade names / trademarks Customer Relationships Management Contracts Other (3) Quilter Cheviot Limited 25-Feb NA NA NA NA NA NA Frank Russell Company 3-Dec , % 75.7% 34.0% 40.1% 0.0% 1.5% Geneva Capital Management 1-Oct % 60.8% 0.0% 0.0% 56.1% 4.7% Nuveen Investments Inc. 1-Oct ,250.0 NA NA NA NA NA NA Ignis Asset Management 1-Jul % 66.5% 0.0% 66.5% 0.0% 0.0% F&C Asset Management 7-May , % 28.0% 0.0% 10.2% 17.9% 0.0% Scottish Widows Investment Partnership Ltd. 1-May , % 63.4% 0.0% 0.0% 63.4% 0.0% Chartwell Investment Partners 5-Mar % 35.9% 0.0% 35.9% 0.0% 0.0% Atlantic Trust Advisors, Inc. 6-Jan % 51.7% 0.0% 51.7% 0.0% 0.0% Jovian Capital Corporation 1-Oct % 62.5% 0.0% 45.0% 17.5% 0.0% Artio Global Investors Inc. 21-May % 59.8% 0.0% 0.0% 59.8% 0.0% Epoch Investment Partners, Inc. 27-Mar % 22.9% 0.0% 22.9% 0.0% 0.0% Thomas Partners, Inc. 14-Dec NA NA NA NA NA NA Natcan Investment Management Inc. 4-Apr % 41.5% 0.0% 14.9% 26.6% 0.0% Claymore Investments Inc. 7-Mar % 60.6% 0.0% 60.6% 0.0% 0.0% Ashmore EEM, LLC 1-Jun % 44.9% 2.0% 42.9% 0.0% 0.0% Commercial Industrial Finance Corp. 13-Apr % 44.6% 1.2% 0.0% 43.4% 0.0% Henderson Group plc 4-Apr % 43.3% 0.0% 0.0% 43.3% 0.0% Rule Investments and Terra Resource Investment Management and Resource Capital Investment 4-Feb % 28.4% 0.0% 0.0% 28.4% 0.0% Acuity Investment Management Inc. and Acuity Funds Ltd. 1-Feb % 65.2% 0.4% 9.9% 54.8% 0.0% Rensburg Fund Management Ltd. 19-Jan % 69.0% NA NA NA NA BlueBay Asset Management plc 17-Dec , % 12.8% 0.0% 12.8% 0.0% 0.0% Hartford Investments Canada Corp. 15-Dec % 30.9% 0.0% 0.0% 30.9% 0.0% Windhaven Investment Management, Inc. 9-Nov % 31.3% NA NA NA NA Catella Brand AB 13-Sep % 24.7% 16.9% 7.8% 0.0% 0.0% Thames River Capital Group 1-Sep % 57.1% 0.0% 0.0% 57.1% 0.0% Concord Capital Limited 16-Aug % 54.5% 0.0% 0.0% 54.5% 0.0% Prairie Capital Management LLC 30-Jul % 37.6% NA NA NA NA Pantheon Ventures Ltd. 29-Jun % 57.0% 0.0% 57.0% 0.0% 0.0% Rensburg Sheppards plc 25-Jun % 40.8% 0.0% 40.8% 0.0% 0.0% Morgan Stanley Investment Management Inc., Retail Asset Management Business 1-Jun , % 73.0% 0.8% 4.6% 67.5% 0.0% BofA Global Capital Management Group, LLC, Certain Assets 30-Apr % 86.0% 6.2% 7.4% 72.3% 0.0% Highbury Financial Inc. 15-Apr % 53.9% 0.0% 53.9% 0.0% 0.0% Advisory Research Holdings, Inc. 1-Mar % 26.5% 1.4% 25.1% 0.0% 0.0% River Road Asset Management, LLC 24-Feb % 51.7% 0.0% 51.7% 0.0% 0.0% BlackRock Institutional Trust Company, N.A. 1-Dec , % 62.4% 7.7% 0.0% 54.7% 0.0% Insight Investment Management Limited Manulife Financial Corporation 2-Nov % 35.5% 0.0% 35.5% 0.0% 0.0% Credit Suisse Group, Certain Fund Management Assets and Businesses 30-Jun % 61.8% NA NA NA NA New Star Asset Management Group Ltd. 9-Apr % 58.6% 0.0% 0.0% 58.6% 0.0% Anima S.G.R.p.A 23-Jan % 30.5% 13.1% 0.0% 17.4% 0.0% Average 51.1% 48.9% 2.5% 21.1% 25.0% 0.2% Range of Useful Life (years) 2 to indefinite 5 to 15 4 to 9 4 to 7 Average Useful Life (years) (1) Includes acquisitions of asset managers with purchase price greater than or equal to $50 million and transaction close dates occurring between January 1, 2009 and June 30, (2) Excess purchase price defined as total consideration less net tangible assets acquired. (3) Other includes primarily acquired technology.

5 Contacts To have a deeper discussion about valuation developments and trends, please contact: James Marshall Principal james.marshall@us.pwc.com Nisha Sheth Principal nisha.sheth@us.pwc.com Earl Wallis Managing Director earl.wallis@us.pwc.com Jameson McNeill Director jameson.mcneill@us.pwc.com