Europe’s asset management sector is evolving rapidly, highlighted by BNP Paribas’ acquisition of Axa’s subsidiary for 5.1 billion euros, sparking interest among firms like Generali and Natixis in potential collaborations. Meanwhile, a proposed merger between Amundi and Allianz faces challenges over control issues. Amidst rising operational costs and shrinking margins, firms are increasingly seeking consolidation and exploring private equity opportunities to enhance competitiveness against major American players. The market continues to thrive despite these obstacles, with notable transactions and strategic partnerships emerging.
Europe’s Asset Management Landscape Transforms with Major Acquisitions
The asset management industry in Europe is experiencing significant growth, particularly after BNP Paribas announced its plans to acquire Axa’s asset management subsidiary for a staggering 5.1 billion euros. This strategic move is set to culminate in mid-2025 and is expected to foster long-term partnerships within the sector. The acquisition has ignited discussions among other European firms, such as Natixis and Generali, aiming to bolster their positions against dominant American firms like BlackRock and Vanguard.
Generali is actively pursuing a preliminary agreement on key terms for a potential asset management deal with Natixis ahead of its investor day on January 30, 2025. Reports from Bloomberg suggest that the two companies are contemplating the establishment of a new entity that would be jointly owned, merging Generali’s 650 billion euros in assets under management through Generali Investments with Natixis’s 1,300 billion dollars held via Natixis Investment Managers.
Challenges and Opportunities in European Asset Management
On another front, discussions for a substantial merger between Amundi and Allianz, aimed at creating a European powerhouse with over 2,800 billion euros in assets, have hit roadblocks. This proposed merger, akin to the BNP Paribas and Axa deal, has stalled primarily due to disagreements concerning the structure and control of the new entity. Allianz, which manages 560 billion euros through Allianz Global Investors, is resistant to relinquishing control, as it views its asset management subsidiary as strategic and performing well.
Initially, Allianz rejected Amundi’s proposal for a minority stake of approximately 30% in the new entity, where Amundi would hold just over 50%. Amundi later adjusted its offer, proposing a stake slightly below 50% to provide Allianz with a more significant influence, which was also declined. This deadlock highlights Allianz’s concerns over potential loss of flexibility in its management policies, while Amundi seeks to capitalize on synergies from the merger.
The consolidation trend in Europe is fueled by a pressing need for competitiveness against American giants. European firms are grappling with higher operational costs and diminishing margins, compounded by a decade of low interest rates and increasing pressure to lower fees. The average fees charged to investors have plummeted from 0.87% in 2004 to 0.36% in 2023, according to Morningstar, prompting managers to seek economies of scale through mergers and acquisitions.
Despite these challenges, the asset management market is flourishing, driven by a growing demand for diversification and higher-yielding assets. The post-pandemic landscape has seen a steady increase in assets, with expectations for continued growth in the coming years. The rise of ETFs (Exchange Traded Funds) has significantly impacted the dynamics of asset management, pushing traditional firms to reevaluate their fee structures and operational strategies in response to the popularity of these low-cost investment vehicles.
As the landscape evolves, asset managers are increasingly exploring private funds, which, while opaque, offer the potential for higher fees compared to public market funds. Leading firms like BlackRock, KKR, and Carlyle Group in the U.S., alongside Amundi and Schroders in Europe, are spearheading this shift towards private equity and unlisted assets, navigating the associated risks of valuation and liquidity.
Consolidation in asset management is viewed as a viable growth strategy, presenting fewer complexities than banking mergers, which often face greater regulatory and political hurdles. Amundi, having grown through strategic acquisitions, now stands as the leading European asset manager with 2,192 billion euros in assets as of September. The firm continues to expand, acquiring companies like Swiss asset manager Alpha Associates and German fintech Aixigo, while also forming partnerships to enhance its offerings.
Recent years have witnessed notable transactions, including La Banque Postale’s transfer of its bond management to Ostrum AM and NN Group’s sale of NN Investment Partners to Goldman Sachs. The ongoing negotiations for the merger of Credit Suisse and UBS’s asset management divisions further illustrate the consolidation trend.
This year, smaller players are also feeling the pressure, leading to a wave of acquisitions by larger groups, including Groupama AM’s acquisition of Inocap Gestion and La Française AM’s partnership with Crédit Mutuel AM. Additionally, smaller firms are merging to strengthen their positions, as seen in the mergers of Montpensier Finance and Arbevel and the absorption of Tocqueville Finance by La Financière de l’Échiquier.