AGEFI Luxembourg - juillet août 2025

Juillet / Août 2025 3 AGEFI Luxembourg Économie Continued page 1 - Spreading risk and unlocking new investment opportunities : In response to mounting pressures, asset managers are diversifying their portfolios across multiple asset class- es. Expanding into different asset types, such as private equity, real estate, or alternative investments, allows firms to reduce their reliance on one asset class and spread risk. For instance, Brookfield Asset Management (4) has strategically diversi- fied its portfolio, mov- ing beyond traditional real estate investments into infrastructure and renewable energy, tapping into sectors with strong growth potential. This strat- egy enables firms to tap into new investment opportunities and potentially higher returns. Diversification within asset classes helps firms become more resilient to market volatility and better position themselves for long-term growth. - Economies of scale and increased efficiency : A key driver of consolidation is the pursuit of increased Assets Under Management (AUM). In an environment where compliance and oper- ational costs are rising, larger asset managers benefit from economies of scale. For example, after acquiring competitors, firms like BlackRock and Vanguard have gained signifi- cant AUM, which allows them to reduce per- unit costs and negotiate better fees with service providers. By consolidating, smaller firms can pool resources, share expertise, and leverage a larger AUM to reduce operational costs. The larger the AUM, the more attractive a firm becomes to investors, and the better its ability to absorb the rising costs of compliance, HR, and operational requirements. - Managing rising compliance and operational expenses : The rising costs of compliance and human resources are significant drivers of con- solidation. Regulations like the Digital Operational Resilience Act (DORA (5) ) in Europe and tax-driven frameworks such as ATAD III and Pillar II (6) increase the operational burden on asset managers. In turn, firms are faced with higher costs for compliance, often requiring them to delegate tasks to service providers, hire additional consultants, or recruit more staff. To manage these escalating costs, firms are con- solidating to gain efficiency, streamline opera- tions, and reduce redundancy. The battle for skilled personnel is also driving this consolida- tion, as larger firms with more resources are better positioned to attract top talent, further intensifying the competitive landscape. 2025: What is coming now? The surge in asset under management (AuM) is here to stay and has taken the form of diversifi- cation into more profitable and dynamic niches, mostly driven by multi-asset managers. Investment strategies such as infrastructures or private debt have witnessed spectacular acquisi- tion and investments over the past few quarters. In January 2025, BlackRock (7) acquired Global Infrastructure Partners, with the clear aim of creating a world-class infrastructure. This merger already resulted in remarkable invest- ments announcement – (yet also amid pressure from the White House), as it revealed its inten- tion to buy many Panama port holdings in a substantial deal. Infrastructure is not the only niche where asset managers are setting their sights. Private debt is also a very dynamic and profitable strategy. In fact, according to a report from Preqin, the global private debt market saw a 15% growth in 2024, surpassing USD 1 trillion in assets. BlackRock, (8) once again, made headlines with its acquisition of HPS Investment Partners. This deal allows BlackRock to create a USD 220 billion AuM heavy franchise in the private debt sector. Partners Group, in their recent key messages from its capital market day on 12 March 2025 has been just as bullish in stating that its organ- ic growth will be complemented by select acquisitions of other private equity firms. These acquisitions will help extend its offerings and support Partners Group in growing its private equity AuM to over USD 200 billion. More specifically, Steffen Meister, Executive Chairman of the Board at Partners Group, clearly targets an increased focus on its existing extended middle-market-focused private credit business and aims to expand its CLO platform through both organic growth and opportunistic acquisitions. (9) Conclusion – a new era for private equity? As the private markets landscape evolves, asset managers must continuously adapt to increas- ing regulatory constraints, rising operational costs, and margin compression. The response to these challenges has been twofold: consolidation to achieve scale and efficiency, and diversification into high-growth, high-margin asset classes such as infrastructure and private debt. Furthermore, the growing importance of retail investors as a new source of capital is reshaping fundraising strategies, opening fresh opportu- nities for firms that are willing to bridge the gap between institu- tional and individual investors. Larger asset managers are better positioned than small- er boutiques to benefit from this trend toward retailization, as they can leverage their experience and infrastructure in retail distribution. Ultimately, the industry is entering a new era, one in which size, strategic positioning, and adaptability will be the key differentiators in maintaining competitiveness and profitability. Laurent CAPOLAGHI, Partner, Private Equity Leader Géraldine CANETTE, Partner, Assurance Private Equity Audit, EY Luxembourg 1) Signature de l’accord d’acquisition par BNP Paribas Cardif d’AXA Investment Managers - BNP Paribas 2) TPG Completes Acquisition of Angelo Gordon | TPG 3) Completion of CVC DIF and Acquisition of Final Stake in CVC Secondary Partners | CVC 4) Brookfield and Microsoft Collaborating to Deliver Over 10.5 GW of New Renewable Power Capacity Globally | Brookfield Renewable Partners 5) DORA’s Balance: Smart Compliance for Investment Firms, Assets Managers and their Funds | DLA Piper 6) ATAD 3 and investment funds: Frequently Asked Questions (editor’s note: to implement a global minimum tax rate of 15% on large multinational enterprises) 7) BlackRock Agrees to Acquire Global Infrastructure Partners (“GIP”), Creating a World Leading Infrastructure Private Markets Investment Platform - Global Infrastructure Partners 8) BlackRock to Acquire HPS Investment Partners to Deliver Integrated Solutions Across Public and Private Markets 9) Partners Group shares key messages from its Capital Markets Day Scale or stall inside private equity’s push to consolidate hW kat anfi ent ce alicn oy ere ats tibam ru er .eg snoi designed xpertise e Experienc our asp o turn y t e with distinctiv ankin e bat e priv laeo r ations int ir entric s -c client ombines g that c .yit e ervic laobgl S C , RgruobmexuL on P s iehcnar s bti ’lanoitanretnG I EF G| URICH Z SINGAPORE .4 156 4 2 253 , T + 573311 uobmexun L . 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