Jupiter Fund Management has confirmed it is in talks to buy peer Merian Global Investors, in the first big deal for chief executive Andrew Formica since he joined the group last year. The FTSE 250 asset manager said talks to buy Merian had been “underway for some time”, warning there was “no certainty” a deal would be reached. “The board of Jupiter sees this as an attractive opportunity to acquire a high quality independent active manager that would represent a strong fit with Jupiter in both investment management philosophy and culture,” Jupiter said in a statement. London’s asset managers have come under heightened pressure to consolidate as passive funds continue to eat into the active management industry, driving down fees even as funds contend with increased scrutiny from regulators. Merger activity has been increasing, with thousands of jobs lost as the sector looks to lower operating costs by consolidating assets. Merian was part of Old Mutual until late 2017, when City veteran Richard Buxton led a £600m buyout of the fund alongside five other portfolio managers and private equity firm TA Associates. Buxton led Merian until he stepped down last year, though he continues to lead its equities team and manages a fund. Bloomberg, which first reported the talks, said Jupiter would pay Boston-based TA Associates less than £500m for Merian in a cash-and-stock deal. Analysts at Canaccord Genuity warned the price cut “raises questions about the quality of the target”. TA Associates previously seized a stake in Jupiter when it was spun-out from Commerzbank in 2007, but exited its position in 2014. “Given the historic relationship between Jupiter and TA Associates, we can"t help but think that this acquisition may be part of a much bigger, long-term consolidation plan in UK asset management,” they added. Jupiter has around £45bn of assets under management. Historically UK-focused, it has recently been pushing into new markets, with Formica – a former star dealmaker at Henderson Global Investors – setting the group targets including a “significant increase” in client assets and profitability by 2024. It is due to report full-year results for 2019 later this month. During his first earnings call as its chief executive in July, Formica said Jupiter faced a “significant number of headwinds”, including a “shifting regulatory landscape, changes in client behavior [and] disruption from new technologies”. Since arriving at Jupiter, Formica has closed several of its underperforming funds. The group’s share took a hit last July, when Alexander Darwall, one of its star managers, quit the group to set up his own fund, taking £1bn of client assets with him. Merian, which focuses on global and UK stocks, has around £22bn under management. Mergers have been no guarantee of success for asset managers: the tie-up of Standard Life and Aberdeen Asset management has failed to stop outflows at the merged group, while Janus Henderson has been experiencing high levels of investor redemptions.