Societe Generale Signals Exit From Amundi With IPO PlanFabio Benedetti-Valentini
Societe Generale SA may sell its entire stake in Amundi in an initial public offering of the asset manager this year as Europe’s banks come under pressure to bolster capital.
Credit Agricole SA, which owns 80 percent, will keep a majority stake, while Societe Generale owns 20 percent, the two French lenders said on Wednesday. Amundi which oversees about 954 billion euros ($1.1 trillion) may be valued at about 8 billion euros, according to Jefferies LLC analyst Omar Fall.
“For SocGen it makes sense to sell now that asset-management valuations are high,” said Vincent Bounie, a managing director at Fenchurch Advisory Partners LLP in London, which isn’t involved in the deal. It should boost Societe Generale’s capital with “little strategic cost” and allows Amundi to raise funds for growth, he said.
Europe’s banks are selling assets and scaling back businesses to bolster capital in the wake of the region’s debt crisis. Italy’s UniCredit SpA and Banco Santander SA of Spain in April agreed to merge their asset-management activities to focus on their key lending operations.
Societe Generale’s capital buffers were eroded at the end of last year and the Paris-based bank faces a decline in activity and rising losses in Russia, where it owns one of the largest foreign lenders active in the country.
“It appears that SocGen may be increasing liquidity ahead of a potential worsening of conditions in some of their markets, like Russia,” said Erin Davis, an analyst at Morningstar Inc. in Chicago.
The IPO will “provide liquidity to Societe Generale,” the companies said in the statement. Amundi will remain the “provider of reference for savings and investment solutions” for Societe Generale’s retail and insurance networks for at least five years, they added.
Credit Agricole will remain Amundi’s biggest shareholder by a large margin and the bank hasn’t decided yet whether it will also sell shares in the IPO, Chief Executive Officer Philippe Brassac said in an interview with Les Echos.
Amundi may be worth at least 7 billion euros, the executive told Les Echos, compared with the 6.7 billion euros it was valued at when Credit Agricole bought a 5 percent stake from Societe Generale last year, Brassac said.
French banks are facing sluggish economic growth at home and higher regulation and fiscal costs. Outside of France, Societe Generale’s main consumer-banking markets are Russia, the Czech Republic, Romania as well as African French-speaking countries. Credit Agricole’s second-largest retail-banking market is Italy.
Societe Generale’s consumer-banking revenue more than halved in Russia in the first quarter, as an economic slump and sanctions curtailed lending in the country. European Union governments on Wednesday struck a preliminary accord to extend financial curbs against Russia by six months to the end of January.
Societe Generale reported a common equity Tier 1 ratio, a key measure of financial strength, of 10.1 percent at the end of March, stable from three months earlier. The metric had dropped by 26 basis points in the prior three-month period.
The IPO would increase the measure by 20 basis points at the end of the year if Societe Generale sells the entire stake, according to the statement.
Societe Generale remains exposed to asset management with Lyxor. The bank transfered a 5 percent stake in Amundi to Credit Agricole last year in return for sole ownership of derivatives brokerage Newedge Group, which had previously been jointly owned by the two banks.
Jefferies’s Fall estimates that Amundi’s valuation, reflecting that of BlackRock Inc., should be about 15 times next year’s earnings. BlackRock manages $4.8 trillion in assets.
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