Schroders spent months exploring a potential acquisition of M&G, a deal that would have created a U.K. fund powerhouse overseeing more than $1 trillion of assets, people with knowledge of the matter said.
London-based Schroders was working with a partner earlier this year to consider a breakup of M&G by splitting its asset management operations from its retirement and insurance unit, according to the people. It recently abandoned the idea after deciding M&G would be too expensive, the people said, asking not to be identified because the information is private.
The deliberations by Schroders, already the U.K.’s biggest standalone asset manager, never led to any formal discussions with M&G, the people said.
Schroders had assets under management of £672 billion ($923.8 billion) as of March 31.
An acquisition of M&G, which was spun off from Prudential in 2019, would have been the biggest targeting a U.K. financial services company in nearly four years, data compiled by Bloomberg show. It would have extended a spree of deals among asset managers, which have been looking at ways to save costs through consolidation as they try to fend off pressure from low-cost passive funds.
For Schroders, a deal for M&G would have marked a major step up in its deal-making ambitions. The group has pursued a strategy of smaller acquisitions under Chief Executive Officer Peter Harrison and his predecessor Michael Dobson, with its largest deal to date coming via the £424 million purchase of wealth manager Cazenove Capital Holdings in 2013.
Industry consolidation
M&G managed £367 billion at the end of last year, spread across equities, bonds and property funds as well as infrastructure and alternative investment offerings, according to its annual report. It also sells a variety of pension, retirement and insurance products to savers in the U.K. and Europe. The company has been pushing further into areas like wealth management, buying the Ascentric digital investment platform last year.
