Intesa’s Eurizon Eyes $430 Billion of Managed Assets in 2017

  • Fund management unit looks to expand Europe staff by 3%
  • CEO wants to boost Europe assets outside Italy by 10%

Intesa Sanpaolo SpA’s fund-management arm expects rising inflows to boost assets to about 400 billion euros ($430 billion) as it expands its institutional client base, adds commercial offers and widens its distribution network.

Eurizon Capital SGR SpA plans to expand its European staff by about 3 percent this year from the current 550 employees, partly by hiring teams specializing in loans, convertible bonds and commercial real estate, according to Chief Executive Officer Tommaso Corcos. The company manages about 10 billion euros in Europe outside Italy and wants to increase that by about 10 percent in 2017, he said.

Tommaso Corcos

Source: Intesa Sanpaolo

“Our aim is do better than the rest of the market” and increase net inflow more than in 2016, Corcos said in an interview at his office in Milan. “If we get close to 400 billion euros of assets, it will be very a important result. It will be difficult, but is something we will be able to do.”

Intesa Chief Executive Officer Carlo Messina is seeking to expand and diversify the lender’s asset-management and insurance businesses, targeting more lucrative products to help counter the negative effect of low interest rates. The bank this week said it’s considering a merger with Assicurazioni Generali SpA, a deal that would reshape Italy’s financial industry by combining its second-biggest bank with the country’s largest insurer.

Eurizon has about 370 billion euros of assets including 78 billion euros managed by Penghua Fund Management -- a Chinese company in which it bought a 49 percent stake in 2007 -- as well as 8 billion euros managed by its U.K partnership. That doesn’t account for any possible tie-up with Generali. Eurizon posted a net income of about 290 million euros in the first nine months of 2016, when net inflows exceeded 12 billion euros.

While he declined to comment about Intesa’s interest in Generali, Corcos said Eurizon may make acquisitions to expand in Europe if opportunities arise. In July, Eurizon bought a majority stake of SLJ Macro Partners LLP, setting up a London-based joint venture in which it owns a 60% stake.

“The creation of scale synergies may be reasonable in an evolving regulatory environment,” he said. “As we did in the U.K., if we find an interesting investment either in terms of teams or in terms of companies that allow us to enrich our offer, certainly we would take it.”

Investment strategy

Corcos plans to bet on equity markets in 2017 as economic growth supports a trend toward higher interest rates. Evolving economic policy in the U.S. will probably be the main theme of the year, with the principal risk being the tendency of markets to immediately price in the positive outlook, leaving little room for growth during the rest of the year.

Europe, Japan, and the emerging countries may outperform the U.S., he said. While Europe and emerging economies offer appealing valuations, they will have to overcome a challenging political calendar and the drag represented by rising U.S. interest rates.

"We start the year having a positive view on risky assets,” he said. “This could be the year that Europe catches up in terms of performance with the United States. We will have important elections in France, Netherlands and Germany. "

Italian stocks, led by banking, can outperform other parts of Europe, closing a gap that’s opened over the last several years, the CEO said. Last year Italy’s benchmark FTSEMIB stock index declined 7 percent compared with a 1 percent gain of STOXX Europe 600 Index.

“In the past months we have seen important steps to solve the banking issues.” The industry “will be able to eliminate these clouds, and easily catch up with the rest of the market.”

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