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Boom-Year for Financial Services M&A Still Has More to Come

The $507 billion in financial services transactions announced this year is topped since the financial crisis only by 2019.

(Bloomberg) -- Financial services dealmaking is booming.

Thanks to a frenzy of transactions in the past week, 2020 is already the second-busiest year since the financial crisis for deals involving banks, financial technology companies, insurers and asset managers.

The $507 billion in financial services transactions announced this year is topped since the financial crisis only by 2019, according to data compiled by Bloomberg. While overall global dealmaking is lagging 2019 at this point by about $400 billion, financial dealmaking’s 2020 total is up 11% from last year, the data show -- with most of December still to go.

“There’s been a lot of activity in asset management, wealth management, fintech, payments, insurance and market structure, and we will continue to see more consolidation activity in financial services,” said Anu Aiyengar, JPMorgan Chase & Co.’s co-head of global M&A. “In addition to health care and technology, financial services could be one of the busiest sectors for M&A next year.”

Leading the pack: S&P Global Inc.’s agreement on Monday buy rival data provider IHS Markit Ltd. for about $39 billion. That pact was followed by two chunky asset management deals on Wednesday: Macquarie Group Ltd. agreed to pay $1.7 billion to buy Waddell & Reed Financial Inc. while blank-check firm Altimar Acquisition Corp. said it was in talks to combine Neuberger Berman’s Dyal Capital Partners and Owl Rock Capital Partners.

For More: Wall Street’s Hot Fads Converge With Dyal, Owl Rock Merger

Driving the trend: Big firms in good shape are looking for scale and diversity amid an uncertain economic outlook. They’re also looking for new business models and technologies that have proved their mettle this year and can be expected to thrive in the altered landscape beyond the coronavirus pandemic.

Up next: There’s more to come, particularly for red-hot special purpose acquisition companies, or SPACs. A blank-check firm led by billionaire Bill Foley is in talks to merge with payments firm Paysafe Group Ltd., people familiar with the matter said last month. Also, boutique investment bank Perella Weinberg Partners is close to a deal to go public via a SPAC backed by finance entrepreneur Betsy Cohen, people familiar with that matter said.

Other big financial services deals this year include:

  • Insurer Aon Plc’s $30 billion agreement in March for Willis Towers Watson Plc.
  • PNC Financial Services Group Inc.’s deal in November to buy Banco Bilbao Vizcaya Argentaria SA’s U.S. banking operations for $11.6 billion.
  • Morgan Stanley’s $13 billion acquisition of discount broker E*Trade Financial Corp. that closed in October
  • Worldline SA’s 7.8 billion-euro ($9.5 billion) takeover of payments company Ingenico Group, which was announced in February and closed in November
  • Nexi SpA’s 7.8 billion purchase of payments firm Nets A/s announced last month

Looking ahead: Financial dealmaking is predicted to remain strong next year, particularly in Europe where long-awaited banking consolidation is underway. Spain has been at the forefront of this wave and the Italian banking sector is also seen as ripe for deals. Dirk Albersmeier, JPMorgan Chase & Co.’s co-head of global mergers and acquisitions, told Bloomberg TV this week that a “strong political desire” to create national champions was driving consolidation in European banking.

--With assistance from Jan-Henrik Förster.

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