Say you’re the biggest bank in America, with lots of cash on hand. You can’t use it for buybacks or increased dividends due to pandemic-related rules imposed by the Federal Reserve, and you want to grow assets under management. What do you do?
Answer: You look for acquisitions in the asset management space for competitive purposes.
That is the scenario feeding the latest rumors about JPMorgan looking to acquire Waddell & Reed and possibly Lazard.
Both firms provide wealth management and asset management services, but Waddell & Reed serves U.S.-based clients and Lazard serves clients globally and also provides investment banking services. Waddell & Reed had $67.billion in assets under management at the end of September, down from $70.3 Billion at the end of August; Lazard had $227.7 billion in AUM at the end of September, down from $232.3 billion at the end of August.
Seeking Alpha, a financial newsletter, reported the Waddell & Reed rumors, citing Dealreporter, which also reported that JPMorgan was also looking at Lazard. By mid-afternoon, WDR shares were up more than 7%, while the broader market fell slightly. Lazard shares were trading over 1% higher.
JPMorgan declined to comment on the rumors; Waddell & Reed and Lazard didn’t return emails or calls seeking comment.
Also feeding the rumors was news last week that Morgan Stanley was acquiring Eaton Vance, which followed an SEC filing the week before reporting that Trian Fund Management had taken big stakes in Invesco and Janus Henderson in the hope of merging the two asset managers to better compete against giant asset manager BlackRock.
In its earnings report this week, BlackRock, the world’s largest asset manager, reported that assets swelled to $7.8 trillion, up 12% from the year before.