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It’s not just sailors and punk-rockers shipping up to Boston.
Wellington Management has agreed to acquire Hartford Funds, the asset arm of The Hartford insurance group, in a deal valued at $1.9 billion. While the firms have partnered for decades, Wellington will gain direct access to Hartford Funds’ extensive advisor relationships through the deal. Hartford Funds, which offers mutual funds, ETFs and 529 college savings plans, manages more than $160 billion in client assets and will be integrated into Wellington’s US wealth business. With the deal, Wellington said it can offer financial advisors broader access to investments, better support and a deeper distribution platform. “The US wealth market has evolved dramatically in recent years and continues to do so at a rapid pace,” Jean Hynes, Wellington CEO, told Advisor Upside. “Advisors increasingly want access to broader capabilities, more vehicles and stronger support.
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Buy ‘Em All
Boston-based Wellington, which is famous for its work on many Vanguard funds, oversees more than $1.3 trillion in assets, but hasn’t focused on M&A in the past. This is actually its first acquisition since the company went private over 50 years ago. As asset managers look to scale, acquisitions are quickly becoming a priority.
Over the next five years, some 1,500 mergers and acquisitions are expected in the wealth and asset management spaces, reducing the number of firms by 20%, according to a report from consultant Oliver Wyman and Morgan Stanley.
Major deals last year included:
BlackRock purchased HPS Investment partners in July, bringing with it more than $150 billion in private credit assets.
Japan-based Nomura Holdings bought Macquarie’s US and European public asset management business in December, acquiring $166 billion in retail and institutional client assets.
Also in December, Janus Henderson agreed to sell itself to Trian Fund Management and General Catalyst Group Management, in a transaction now valuing the business at about $8 billion.
A Thin Line. The bar to profitability used to be lower and there was enough organic growth to go around, but now mid-sized players are operating on much thinner margins, as leaders take an increasingly disproportionate share of net new money, according to the report. “We expect the combination of these factors to drive consolidation as mid-sized players become attractive targets for leaders seeking further scale and diversification,” the report said.
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