Merger & acquisition (M&A) activity in the wealth management sector is set to surge over the next 12 months, according to report from law firm White & Case LLP.

It forecast that M&A activity would see strong growth, driven by the ‘voracious’ appetite of large financial sponsor consortiums and ongoing consolidation.

The firm said it had seen private equity-driven deals, including acquisitions, the mergers of equals, bolt-on M&A, and ‘supercharging’ trade consolidators over the past 12 months.

European market consolidation was skewed towards smaller and medium-sized deals, especially in the UK.

Strong appetite for deals from mega financial sponsor consortiums and solo financial sponsors was also reported.

White & Case found that private banks were adopting polarised strategies across different business lines, with some slimming down and others bulking up.

Investment in wealthtech remained a key focus for established managers, with value-enhancing technology being swallowed up by established managers amid strong availability of growth capital for wealthtech.

The report highlighted that superior technology was delivering competitive advantages, with key focus areas including AI adoption, end-to-end workflow automation, and turnkey digital asset management infrastructure.

Meanwhile, private equity was encouraging and funding growth through bold-on M&A involving the acquisition of rival managers and high-performing teams.

“Asset/wealth management M&A remains consistently hot driven by the voracious appetite of mega financial sponsor consortiums and solo financial sponsors who are encouraging and funding growth through acquisitions, mergers of-equals, bolt-on M&A and trade consolidation,” commented White & Case partner and Financial Institutions Industry Group global co-head, Hyder Jumabhoy.

“Investment in wealthtech remains a key focus for established managers who are swallowing value-enhancing technology to deliver competitive advantage.

“We do not see M&A activity slowing down in the short-term. With activist forces holding listed managers to account and private equity driving consolidation amongst smaller managers, we expect plenty of deals to be inked in the next 12 months.”

---