Invesco eyes OppenheimerFunds for third ETF acquisition in two years

Sep 23rd, 2018 | By | Category: ETF and Index News

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Invesco is understood to be in the final stages of acquisition talks with OppenheimerFunds in a deal worth around $5 billion, according to sources close to the matter.

Invesco eyes up OppenheimerFunds for third ETF acquisition in two years

Invesco is reportedly in the final stages of acquisition talks with OppenheimerFunds in a deal worth around $5 billion.

The deal, potentially to be announced in October, would be Invesco’s third ETF-related buyout in two years, following the acquisitions of Source and Guggenheim Investments in August 2017 and April 2018 respectively.

The asset manager’s appetite for acquisitions has been viewed as a bid to establish itself among the largest asset managers in the world before competitive fee pressures squeeze out those at the lower end of the AUM scale.

While smaller asset managers and ETF issuers may not yet be feeling the pinch as bullish markets swell assets and drive fee revenue, traditional active managers are particularly vulnerable to a downturn in equity markets, according to research by rating agency Moody’s.

OppenheimerFunds’ ETF business is relatively small in the US. The firm is ranked twenty-seventh in terms of ETF AUM with approximately $3.2bn in assets, a fraction of the $196bn housed by Invesco’s ETFs. Invesco comes fourth in the ETF league table.

Although OppenheimFunds may be a small fish in the US ETF market, it known for its revenue-weighted smart beta ETFs which it acquired from VTL Associates in December 2015. The suite of products offers global and regional equity exposures while weighting constituents based on their top line revenue.

The firm also has a range of single- and multi-factor ETFs launched in partnership with FTSE Russell.

OppenheimerFunds’ total fund AUM comes in around $250bn when including its much larger actively managed mutual fund businesses.

Successful completion of the acquisition would catapult Invesco’s total fund AUM to around $1.2 trillion, placing it on a more competitive footing with the likes of BlackRock, Vanguard, or Fidelity.

OppenheimerFunds is owned by MassMutual.

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