Italian insurer Generali and French banking group Banque Populaire and Caisse d’Epargne (BPCE) are combining their respective asset management businesses, Generali Investments and Natixis Investment Managers, in a joint venture becoming the second largest asset manager in Europe with over €1.9trn in assets under management (AUM), the firms announced today.
Generali and BPCE have signed a non-binding memorandum of understanding for each to own 50% of the joint venture, set to manage a diversified portfolio of assets under a balanced governance structure.
The new asset management entity, according to plans based in Amsterdam, will have a strong presence in Europe, with 61% of total assets managed in the region and a strong footprint in France and Italy, 34% of total AUM in North America and 5% in Asia and other countries.
France, Italy and the US will remain operational hubs of the combined business in charge of day-to-day operations, according to the firms.
The new entity will offer a wide range of strategies in different asset classes for a diversified pool of investors, aiming to further scale its third-party business in Europe, North America and regions in Asia.
Cathay Life, a subsidiary of Cathay Financial Holdings, would remain an important strategic partner in Asia, while Generali Investments has contributed to driving forward the expansion of the asset management business in the region with the acquisition of Conning, which serves mostly insurance and institutional clients, from Cathay Life.
“European managers are entering the “race-for-scale” by joining forces to attempt to remain competitive in an asset management industry increasingly dominated by large, global firms, especially out of the US,” Myles Manning, senior strategy consultant at Indefi, told IPE.
Indefi has warned asset managers from focusing only on scale, size or rationalisation of costs that might not lead necessarily to having a competitive edge.
“It is likely that these sort of ‘mergers-of-equals’ will continue, but we expect to see a greater uptick in inorganic activity that will allow asset managers to reinforce or enhance their value propositions towards their shareholders and clients, such as deals for bolt-on capabilities or access to new distribution channels/geographies, as well as strategic or product partnerships, especially in the liquid and illiquid space,” Manning added.
Strengthening network of affiliates
This year, Generali Investments has strengthened its asset management operations and private credit business globally by acquiring a majority stake in MGG Investment Group in the US.
Private market investments under the new firm will make up 14% of AUM totalling over €1.9trn, while approximately 65% is allocated to fixed income, and around 21% to equities, the firms said.
Generali and BPCE would retain full authority over asset allocation decisions for their respective assets, they added.
Under the terms of the agreement, Generali has committed to deploying €15bn in seed capital to support and accelerate the business of the joint venture affiliates over the next five years, and developing new investment strategies.
Both Generali Investments and Natixis IM operate multi-boutique platforms with affiliates investing in a wide range of asset classes.
One of the new entity’s strategic goals is to boost offering in private assets to meet the growing expectations of clients in these asset classes, based on the capital provided by Generali, the duo added.
Impacts on pensions industry
Around 61% of the joint venture’s total AUM is managed on behalf of pension funds and insurance companies, with other institutional and retail/wholesale clients respectively representing 14% and 25% of the client base.
Natixis IM and Generali Asset Management, the investment specialist and affiliate of Generali Investments, are among the top 120 European institutional managers according to IPE Top 500, with over €500bn assets combined.
As the global pension industry becomes increasingly sophisticated and consolidated, especially amid the transition from defined benefit to defined contribution plans, Indefi expects pension funds to work with a smaller amount of preferred asset managers providing a wider range of offerings tailored to the needs of their clients.
“We believe that these sort of transactions can help managers increase their penetration into the pension space, as well as provide better value to their pension clients, given that the necessary capabilities in terms of technology, customisation and client servicing are in place,” Indefi’s Manning said.
Balanced governance
The joint venture will have a balanced governance structure, with BPCE’s chief executive officer, Nicolas Namias, serving as chair of the board, and Generali’s CEO, Philippe Donnet, as vice chair.
Woody Bradford, the current CEO of Generali Investments, will serve as CEO of the new entity, and Philippe Setbon, the current CEO of Natixis IM, as deputy CEO.
Donnet said: “The joint venture marks a key milestone since the launch of Generali’s asset management business seven years ago and is testament to the significant achievements over the most recent strategic cycles.”
Namias added: “Today we are thrilled to take a new step toward creating the largest asset manager in Europe and a major global player, alongside Generali, a financial institution that shares our values. We would leverage our strengths in France, Italy, and the United States to innovate for our clients and transform the asset management sector.”
The closing of the deal is subject to regulatory approvals and expected by early 2026.
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