asset management industry - 6 december 2010

8/8/2019 Asset Management Industry - 6 December 2010

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Present and future industry size and growth

The global asset management industry showed encouraging signs ofrecovery in 2009, a trend that is expected to continue in 2010 -McKinsey

The industry is anticipated to reach US$129.2 trillion by 2015,driven largely by favourable macroeconomic factors andtransforming demographic trends - Global Industry Analysts Inc.(GIA)

1/4Global Asset Management Industry


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Regional Analysis

In 2009, on average assets under management increased 11% in NorthAmerica, 12% in Europe, 7% in Japan and Australia, 25% in the rest of Asiaand 22% in Latin America

The United States and Europe dominate the global asset managementmarket with about 74% share of the total assets under management (AuM)

Rising life expectancy rates and falling birth rates are contributing to thegrowing proportion of elderly in the overall population, which further putsstrain on conventional pension insurance schemes

Global economic crisis has significantly affected the asset managementindustry, even among investment categories that were once regarded aslow-risk and safe

Contracting assets under management and reduced revenues affectedperformance fees and management fees, thereby affecting the overallprofitability of the asset management industry

India and China have emerged as the favoured destinations for domestic andinternational asset managers due to large untapped potential of the markets.Rising income levels and the substantial rise in the number of high-

income individuals, an aging population, and rising inflation areaccelerating the demand for assets management in these countries

In 2009, AuM in emerging markets grew stronger than those in developedmarkets due to stunning inflow levels of between 8 and 10 percent. In

contrast, inflow in developed markets have been growing by between 0 and 2percent - McKinsey

Global Asset Management Industry


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Key Players

AXA Group, Blackrock Inc., BNP Paribas, BNY Mellon AssetManagement, Crdit Agricole SA, Credit Suisse Group AG, DeutscheBank AG, Fidelity Investments Ltd, HSBC Holdings Plc, JPMorganChase, Legg Mason Inc, Merrill Lynch & Co., Inc, Natixis SA, Northern

Trust Corporation, State Street Global Advisors, The Capital GroupCompanies Inc, The Goldman Sachs Group Inc, The Vanguard Group

Inc, and UBS AG.

Source1. http://newslife.us/economy/Global-Asset-Management-Market-to-Reach-US-129-2-Trillion-by-2015-According-to-New-Report-by-Global-Industry-Analysts-

Inc/

Global Asset Management Industry


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Global Asset Management Industry4/4

Source1. http://newslife.us/economy/Global-Asset-Management-Market-to-Reach-US-129-2-Trillion-by-2015-According-to-New-Report-by-Global-Industry-Analysts-

Inc/

Key Asset Classes

Since reaching a nadir of

just under $9 trillion inMarch 2009, total mutualfund assets haverebounded to reach over$10.5 trillion by Mid-2010.

Flows into long-termmutual funds have been

strong, led primarily byflows into fixed incomefunds.

Equity fund flows haveremained positive due tocontinued demand for

emerging market fundsH1 2010 witnessed thevalue of funds managed byhedge fund managerscrossing $1.5 trillion due toimproved economicconditions.


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Under Construction.


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Global Asset Management IndustryAsset Under Management, 2005-2010E

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Retirement Assets: 7.9% annual growth to$17.1 trillion

Retail Assets: 9.2% annual growth to $11.7trillion

Other Assets: 7.9% annual growth to $17.1trillion

2008 2013

Five-Year View: Opportunities

Abound

Retail markets continue to provide the mostattractive prospects for growth

Advisory platforms represents greatest mutual fundnet flowsExplosion in alternatives, EFTs (including activeEFTs)


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PE deals value crossed the deals value in the entire2009 - According to data compiled by deal space research

firm VCCEdge, the first seven months of 2010 have seenprivate equity deals valued at $5.1 billion, as compared to$4.3 billion in entire 2009.

PE Investment - India1/3

70-75

Sources:

1.http://www.indusadvisory.com/Indian_VCPE_Report_2009.pdf2.http://www.bain.com/bainweb/publications/brief_detail.asp?id=28119&menu_url=briefs.asp3.http://www.vccircle.com/500/news/india-may-see-75b-pe-investments-in-2010-15-idg-ventures-study


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India is poised to attract higher VC/PE investmentsthan China - The private equity and venture capital industry

is likely to witness estimated investments worth $70-75 billionin 2010-2015 with existing growth rates. However, withproactive encouragement and incentives from thegovernment, a $100-billion investment target is possibleduring this period, according to the data released by IDGVentures India.

Expected sectors of focus - As per the sector-wiseforecasts, IT & ITES, manufacturing, healthcare andengineering & construction will witness $30-billion plusinvestment in 2010-2015.


Sources:



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Major sectors of investment(2004-08) During 2004-08, majority of PE

investment focused on technology-ledcapital intensive sectors. Major sectors of investment(2009)

In addition to technology companies,PE investors have focused on the realestate sector as well. A trend that

continued in 2010 VCCEdge and BainConsulting Top deals of the year

Olympus Capital's $300 millioninvestment in Tata Power

Xander Real Estate Partners

$110 million investment inPanchshil Realty


Sources:



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Rising PE investment in Indian real estate sector -According to Anuj Puri, Chairman & Country Head, Jones Lang

Lasalle, Private equity investors, on their part, are definitelyinterested in investing in Indias real estate sector. In the firsthalf of 2010 alone, India Inc saw over 150 major deals and,significantly, a little over 10% of these were in relation to thereal estate sector

PE fund preferring residential sector - Currently, theproportion is heavily skewed towards residential. This can beattributed to the fact that the residential sector is correctlyseen as a self-liquidating asset class, while commercial andretail real estate have exit-related concerns due tounavailability of REIT/REMF vehicles in India

Changed priorities of PE funds - PE investors expectreturns between 20-25%, post tax. These expectations arealmost the same as what they were before the downturn however, the structure has changed, as private equity fundsare now focusing more on capital protection. In other words,

they seek lower risk even if that means slightly lower returns

Private Equity - Indian Real Estate1/2

Sources:1.http://www.joneslanglasalleblog.com/realestatecompass/real-estate/2010/11/private-equity-indian-real-


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New PE funds in the real estate sector - Some newprivate equity funds have recently entered the Indian real

estate arena among them Aditya Birla and ASK. PE funds are being directed to Tier 2 cities - It first

seemed as though a majority of the PE funds in the systemwere being directed into the primary cities namely Mumbaiand Delhi NCR. However, it emerges that not a few private

equity funds have also chosen to invest into large residentialprojects in Tier 2 cities, since they perceive that the demandfor residential spaces in those cities is heavy enough to justifyquick absorption.

Private Equity - Indian Real Estate2/2

Sources:1.http://www.joneslanglasalleblog.com/realestatecompass/real-estate/2010/11/private-equity-indian-real-

asset management industry - 6 december 2010

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