Asset management companies seem to be flying the coop like a bunch of twenty-somethings belatedly realising their teenaged years are behind them.
Last week, South African bank Investec PLC (LON:INVP) announced plans to demerge its asset management arm, IAM, and float it on the London Stock Exchange.
READ Investec to spin out asset management arm after strategic review
As such, it had reached much the same conclusion as another South African finance house, Old Mutual Limited (LON:OMU), which decided in 2016 that it was better off being split up into four separate parts rather than carrying on as some kind of Heath Robinson-inspired financial contraption.
That separation seems to be taking longer than the Brexit negotiations but at least we know what Old Mutual’s plans are and they are at least partly underway with the flotation of wealth management business Quilter PLC (LON:QLT) in June of this year.
READ Quilter off to flying start but there may be speed bumps ahead
In its first week as a listed company Quilter completed the sale of its Single Strategy asset management business to the Single Strategy management team, conjuring up images of asset management companies being constructed on the Russian doll model.
The man from the Pru sets Prudential M&G free
It is not just South African companies that have been jettisoning their asset management divisions, either; in March, Prudential PLC (LON:PRU) said it plans to demerge its M&G Prudential business and sell £12bn of its UK annuity portfolio.
Prudential M&G was formed after the parent company rolled its UK asset management business, M&G, into its Prudential UK and Europe life insurance unit last year.
Chief executive Mike Wells said after the separation, M&G Prudential will have more control over its business strategy and capital allocation, allowing it to play a “greater role in developing the savings and retirement markets in the UK and Europe”.
Somewhere in a stock market news release dated in Roman numerals – M&G has been around a looooong time – there is probably a statement from a Pru boss extolling the virtues of having an asset management business as part of the company.
READ Prudential to spin-off M&G Prudential and sell £12bn of UK annuity portfolio
So, why have the finance houses seemingly fallen out of love with asset management?
Well, maybe they haven’t.
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Maybe they just believe that 10 years after the global economic crash and the steady recovery of stock markets this decade – the Footsie has risen from 5,359 to around 7,310 while US markets have been breaking new records this year – the time is right to cash in.
Alternatively, management teams may have tired of the frequently changing regulatory landscape associated with the world of looking after other people's money.
From the point of view of asset managers, being cast adrift need not be all bad. Independence probably makes industry consolidation easier.
The merger of Standard Life and Aberdeen Asset Management in August of last year was the most recent high-profile example of consolidation in the sector and while the marriage has not been without its rocky moments – the companies probably weren’t figuring on Lloyds Banking Group PLC (LON:LLOY) and its Scottish Widows business withdrawing £109bn of assets due to competition concerns – but the cost savings resulting from the merger are expected to be significant at £200mln a year.
READ Standard Life Aberdeen receives UBS upgrade on expected cost synergies of merger
As such, no one should be too surprised should these newly independent asset management firms find themselves part of a bigger organisation again at some point in the future.