Amundi IPO to Create Europe's Biggest Traded Asset Managerby and
Societe Generale plans to raise $1.9 billion in stake sale
Credit Agricole will remain majority shareholder after IPO
Societe Generale SA is seeking to raise as much as 1.75 billion euros ($1.9 billion) by selling its 20 percent stake in Amundi Group as part of an initial public offering that will create Europe’s biggest publicly traded asset manager.
Amundi, co-owned by French banks Societe Generale and Credit Agricole SA, kicked off the IPO Monday, setting the price at 42 euros to 52.50 euros apiece. That would give the Paris-based company a market value of as much as 8.8 billion euros, more than any European investment firm on the continent. In the U.K., Schroders Plc has a market cap of about 8 billion pounds ($12.4 billion).
Amundi plans to become a “natural alternative to big U.S. fund managers," Chief Executive Officer Yves Perrier said in October. By going ahead with the IPO now, the company may benefit from the rebound in global stock markets in October from their worst quarterly performance since 2011. With investors seeking ways to offset record-low interest rates in Europe, the company stepped up its sales pitch with a pledge last month to raise earnings and dividends.
Amundi, created from the 2010 merger of Credit Agricole’s and Societe Generale’s fund activities, is already Europe’s biggest asset manager with 954 billion euros under management at the end of June, including 41 percent as mandates from Credit Agricole’s and Societe Generale’s insurance units. It is looking to capture a bigger slice of savings flows in France and abroad.
Unlike in the U.S., Europe’s large asset managers mostly operate as part of banking or insurance groups. With businesses in 30 countries, Amundi is targeting 120 billion of net inflows over the next three years, more than a third from clients such as sovereign wealth funds, pension funds and corporations.
Societe Generale will exit Amundi, leaving Credit Agricole owning the lion’s share. The stake sale will help France’s second-biggest bank continue to comply with rising regulatory demands for banks to hold more capital. The lender has said it expects the sale to add about 20 basis points to its core capital level, which stood at 10.4 percent at the end of June. Societe Generale will exit Amundi, leaving Credit Agricole owning the lion’s share.
Societe Generale rose 1.5 percent to 42.95 euros by 4:17 p.m. in Paris trading, giving the lender a market value of 34.6 billion euros. Credit Agricole, France’s third-largest bank, rose 2.3 percent to 11.78 euros.
The IPO will “benefit Societe Generale’s capital,” said Jerome Forneris, who helps manage $9 billion at Banque Martin Maurel in Marseille and owns shares in both Societe Generale and Credit Agricole. “The market environment is more favorable today than two months ago.”
Credit Agricole plans to sell about 2 percent of its 80 percent stake to a unit of Agricultural Bank of China as part of the IPO process, Amundi said in a statement Monday. The offer ends Nov. 11 and shares in Amundi will start trading on the Paris stock market on Nov. 12.
“This transaction confirms the strategic importance of asset management within the Credit Agricole Group, and its role as a key driver of the overall development of the group,” CEO Philippe Brassac said.
Amundi projects net income this year of between 515 million euros to 535 million euros, which would value it at as much as 17 times annual profit. BlackRock Inc., the world’s largest asset manager with $4.5 trillion in assets at the end of September, has a market value close to 18 times the $3.27 billion profit estimated for this year by 11 analysts surveyed by Bloomberg.
Separately, Amundi Real Estate took possession of 11 of the 17 buildings it’s buying from Union Investment in a 1 billion-euro transaction, the seller said on Monday. The properties are in the U.K., France, Germany and the Netherlands.