Photographer: Martin Divisek/Bloomberg

Axa Said to Weigh Merger for European Asset Management Unit

  • Potential partners for unit include French insurer Natixis
  • Competition, regulation are driving consolidation in sector

French insurer Axa SA is reviewing options for its European asset management unit amid consolidation in the sector, according to people familiar with the matter.

Axa is considering a merger or joint venture for the business, the people said, asking not to be identified because the details aren’t public. Potential partners could include Natixis SA, the people said. Any transaction could be a precursor for an eventual initial public offering or partial sale, one of the people said.

No final decisions have been made, and Axa may choose to retain the unit as is, they said. Representatives for Axa and Natixis declined to comment. Natixis, based in Paris, is controlled by Groupe BPCE, France’s second-largest banking group.

“This would be a transformational deal for Natixis as they want to expand in AM,” said Maxence Le Gouvello, an analyst at Jefferies in London with a buy rating on the stock. “A deal of this size would likely mean that BPCE ownership in Natixis would be diluted.”

Axa’s European asset management business reported annual sales of about 1.2 billion euros ($1.4 billion) in 2016, a 3 percent decline from a year earlier. Paris-based Axa Investment Managers oversaw 735 billion euros in assets as of the end of June, according to its website.

More Consolidation

A majority of asset managers expect that competition from exchange-traded funds and other index strategies, as well as more complex regulation, will force consolidation in the sector, according to a State Street survey in July. British insurer Standard Life Plc’s approximately 4 billion-pound ($5.3 billion) merger with Aberdeen Asset Management Plc was the largest deal of its kind in Europe this year.

Paris-based investment services firm Amundi SA is one model for consolidation in the sector. The company was created in 2010 when Credit Agricole SA and Societe Generale SA combined their asset management businesses. Societe Generale sold its entire stake in the company when Amundi listed in Paris in November 2015. The stock has climbed about 50 percent since the IPO, data compiled by Bloomberg show.

Axa, Europe’s second-largest insurer, said in May it was planning to list a minority stake in its U.S. businesses, including its U.S. Life & Savings unit and its 64 percent stake in AllianceBernstein Holding LP. Axa Investment Managers is present in 14 cities in Europe and covers investment strategies ranging from equities to fixed income to real estate.

Natixis is “constantly on the lookout” for acquisitions but also wants to stick with a model “not based on cutting staff or cutting costs to the core,” Jean Raby, who this year became head of Natixis’ 834 billion-euro fund-management operations, said in June.

Natixis Chief Executive Officer Laurent Mignon is preparing new financial targets that will be presented at a November investor day. The company this month expanded its insurance holdings with the acquisition of the 40 percent of BCPE Assurances that it didn’t already own.

Axa was little changed in Paris trading at 24.79 euros as of 9:06 a.m. Natixis shares were down 0.7 percent at 6.51 euros.

— With assistance by Geraldine Amiel, Aaron Kirchfeld, Ambereen Choudhury, and Fabio Benedetti Valentini

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