Marsh's Mercer to Add SCM, Brace Alternative Investments
To ramp up alternative investment capabilities, Mercer, a wholly owned subsidiary of Marsh & McLennan Companies, Inc. (MMC), recently inked a deal to buy SCM Strategic Capital Management AG. The deal, pending regulatory approvals, is expected to see light in the first quarter of 2015. Shares gained 0.5% in the last trading to close at $56.12 at the day’s close.
Founded in 1996, Zurich-based SCM Strategic Capital Management AG is an independent, specialized Swiss investment advisor for institutional investors.
Alternative investments are gaining importance in the global institutional marketplace and as such, addition of SCM Strategic Capital to the company’s portfolio will provide a competitive edge to Mercer besides adding capabilities, which will in turn, accelerate revenue growth. Mercer noted that its clients are increasingly looking for advice regarding alternative investment strategy, either through a custom portfolio or a delegated solution. Thus, the acquisition forms a perfect strategic fit. As of Sep 30, 2014, Mercer had $108 billion in assets under management, including $13 billion in alternative assets under management.
Upon receiving approval, SCM Strategic Capital’s investment team will join Mercer.
Marsh & McLennan has always adopted the inorganic path to ramp up its growth profile. The acquisitions are well supported by the company’s strong liquidity position. While cash and cash equivalents totaled $2.6 billion at third-quarter end (up 15% from 2013 end-level), retained earnings were solid at $10 billion (up 6.2%).
The Zacks Consensus Estimate has been witnessing an upswing following a solid third quarter performance. With optimism high on the company’s compelling inorganic growth story, we expect analysts to raise estimates exerting upward pressure on this Zacks Rank #3 (Hold) stock.
As insurance brokers increasingly opt for the inorganic route to growth, the takeover saga continues to rage the space. Recently, Arthur J. Gallagher & Co. (AJG) announced the takeover of Miller-Harrison Insurance Services that will strengthen its retail insurance business. Validus Holdings, Ltd. (VR) has acquired Western World Insurance Group, Inc. Moreover, Willis Group Holdings Public Limited Company (WSH) has proposed the takeover of SurePoint Reinsurance along with the buyout of a range of Irish pension and financial advisory businesses from IFG Group plc.
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