Growth through acquisitions for Australian managers

A State Street report has identified transformation in the superannuation industry and evolving investor needs, as key factors driving industry acquisitions over the next year as local asset managers rethink their business strategy.

Australia's deepening pool of superannuation assets has created strong local opportunities for merger and acquisition activity, with more than 77 per cent of managers surveyed said they saw increased opportunity to make acquisitions over the next year.

This compares with 57 per cent of US-based managers and 90 per cent of Japan-based managers, the report said.

The report also found more than 84 per cent of the Australian respondents said changing client demands are causing a fundamental shift in their overall business strategy, and 80 per cent predicted multi-asset investment strategies would drive the most growth over the next three years.

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A shift to multi-asset investment solutions requires a major transformation in many aspects of an asset manager's operating model, yet 73 per cent say that few managers are equipped to offer them successfully, the report said.

The evolution from traditional products towards holistic multi-asset solutions, as a mainstream investment strategy, will require significant investment in skills training and talent acquisition to address capability gaps, State Street head of asset manager sector solutions, Paul Khoury, said.

"While the more innovative managers are already doing this, others will need to embark on acquisitions within the industry to gain the skills, talent and tools to address their capability gaps," he said.