In Britain, insurer CGNU Plc said it was eyeing acquisitions in the U.S. and domestically, while Anglo-U.S. fund manager Amvescap said it was in talks to acquire smaller British rival Perpetual. Consolidation in the fund management industry is being driven by the privatisation of pension provision and the increasing demand for cross border investment, particularly in equities. "Fund managers need to become global to get critical mass, they need to gather a diversity of assets, product skills and expertise," said Mike Cuthbert director at ING Barings Charterhouse Securities. Until now the pace has been set by U.S. fund firms looking to cash in on Europe's burgeoning market for pensions and savings products and increasing appetite for equity investment.

Acquisitions, such as Merrill Lynch's purchase of Mercury Asset Management and Nationwide Mutual's of Gartmore, have focused on British fund firms whose skills can be leveraged into the wider European market. But European firms are fighting back in search of access to the U.S., which accounts for around half the world's mutual fund and pension assets. "The U.S. is the biggest market in the world...you cannot have pretensions to be a global asset manager without being in the U.S.," said Cuthbert. Organic growth is costly and time consuming so Europeanfirms are opting to buy U.S. access and product expertise, said Thomas Marsh, at Boston-based research and consulting firm Cerulli Associates.

Big Deal
Heading the list of European buyers is insurance giant Allianz which is buying San Diego-based equity specialist Nicholas-Applegate. The deal will give Allianz a manager with growth-style U.S. equity, global and emerging markets skills to add to the fixed-income capabilities it acquired through its purchase of U.S. bond house PIMCO earlier this year. Allianz also acquired value-style equity manager Oppenheimer Capital in the PIMCO deal, giving the German insurer a full compliment of asset management products.

Nicholas-Applegate has assets under management of $45 billion bringing global assets at Allianz to 750 billion euros. ABN AMRO is to fork out $825 million for U.S. equity and fixed income fund firm Alleghany Asset Management. The firm is comprised of Montag & Caldwell in Atlanta, with $30 billion in assets under management, and the Chicago Trust Company in Chicago with assets of around half that figure. Around 80 percent of Alleghany's clients are institutions. The deal "substantially increases ABNAMRO Asset Management's presence in the world's largest fund market," the company said in a statement. "Alleghany Asset Management's activities provide ABN AMRO in North America with the ability to attain scale in key product lines, as well as cross-selling opportunities."