Managers seek mergers in alternatives space

Mergers and acquisitions (M&A) in the alternatives fund management industry is tipped to rise in 2013, with 10 per cent of fund managers planning to acquire another business in the next five years, a report suggests.

The forecast represents a marginal increase on the last five years, which saw 7 per cent of fund managers picking up a new venture, the State Street Corporation survey showed.

Regional expansion is also on the cards, with nearly one in five surveyed fund managers planning to expand into new regions by 2018, while 18 per cent plan to introduce managed accounts.

Contrary to previous reports, growth in the alternatives sector is expected to continue, with fund managers looking to reassess fee structures and adopt more innovative approaches to remain competitive, George Sullivan, executive vice president and global head of State Street's Alternative Investment Solutions, said.

"Managers who remain innovative as they respond to demands from investors will be positioned for success in this new era where investors will look to employ alternatives more commonly than ever before," he said.

More than half of the 400 surveyed alternative fund managers said they expected an increase in the use of hybrid alternative fund structures, which merge elements of traditional hedge fund and private equity models.