Budget throws M&A spotlight on UK funds sector

Thu Mar 20, 2014 3:01pm EDT
 
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* Savings, pensions overhaul to increase asset manager value

* Deals traditionally tough to make work, staff key

* May entice new entrants; F&C deal highlights valuations

* In-house fund arms of insurers may also attract interest

By Simon Jessop

LONDON, March 20 (Reuters) - A radical shake-up of the UK's pensions and savings industry could be the trigger for suitors to look afresh at deals in the asset management industry, even if they can be hard to secure.

Up to 15 billion pounds ($24.76 billion) a year, by some estimates, could find its way to the mutual fund industry after the government relaxed rules forcing pensioners to buy an annuity at retirement in Wednesday's budget.

At the same time, finance minister George Osborne raised the limit on how much people could save tax-free in Individual Savings Accounts to 15,000 pounds a year and loosened the rules around what people could invest in.

"The outlook for asset managers in terms of new asset flows is pretty positive," said Ed Dymott, head of business development for Fidelity Worldwide Investment, particularly given 70 percent of UK personal wealth is held by a generation that is set to retire over the next 10 years.   Continued...