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FTSE 250 asset manager Liontrust has approached its smaller London-based rival Artemis about a potential takeover, as mid-sized asset managers continue to combat the mounting pressures sweeping across the investment industry.
Liontrust recently held early-stage discussions with Artemis about a potential tie-up, according to three people familiar with the situation. Another source said talks were no longer ongoing. Liontrust said it was “not in talks with Artemis over an acquisition of its business.” Artemis declined to comment.
The talks between Liontrust, which has £27.8bn in assets under management and Artemis, an independent boutique that oversees £23.4bn, come as the UK fund management industry battles multiyear headwinds.
Mounting regulation is increasing the cost of doing business, eating into margins at a time when many clients are pulling their money from funds run by stockpickers in favour of cheaper passive funds that track an index. This is driving consolidation in the industry as managers turn to mergers and acquisitions to bulk up, cut costs and pursue new clients or areas of growth.
Under chief executive John Ions, Liontrust has bought seven asset management boutiques in 12 years, as he seeks to diversify the business beyond its roots in UK growth equities. This includes a £40mn acquisition of Neptune in 2019, and a £120mn deal for Majedie Asset Management in 2022.
But successfully combining fund management businesses is notoriously difficult and Liontrust’s own mixed record of acquisitions illustrates how dealmaking is neither a panacea to the industry’s challenges nor an assured catalyst for growth.
Liontrust’s share price is down more than 70 per cent since its September 2021 peak. It suffered net outflows of £4.8bn in the 12 months to March 31, and investors pulled another net £4.9bn from its funds in the nine months to December 31. Its overall assets at the end of last year totalled £27.8bn, down 15 per cent from a year before.
The discussions with Artemis come just over six months after Liontrust’s failed bid to buy GAM for £96mn in an all-share deal. At the time, Ions said the GAM deal would “create a global asset manager, well-positioned for long-term growth”. But he failed to convince the Swiss asset manager’s shareholders, who rejected the bid on the grounds that it undervalued the business.
Artemis is owned by its 27 partners — among them fund managers and key individuals at the firm — and US investment company Affiliated Managers Group, which bought a majority stake in the business in 2010. AMG takes a share of Artemis’s revenues but does not get involved in the day-to-day running of the business.
While GAM would have brought Liontrust a global distribution network, Artemis’s distribution strength lies in the UK. Its well-known UK equity funds include the £4.5bn Artemis Income fund run by Adrian Frost, Nick Shenton and Andy Marsh.
AMG, which buys stakes in the management companies of alternatives and mainstream asset managers, did not respond to a request for comment.
Additional reporting by Sally Hickey
