Generali signs joint venture with Natixis for asset management

After rumors that have followed one another for almost a month, and despite the concerns of two important partners such as Caltagirone and Delfin, the Italian insurance giant Generali and the French group BPCE have signed a non-binding memorandum of understanding (MoU). for creating one joint venture in asset management with the aim of creating the first operator in Europe by revenue.

The new company, which will have assets and activities for a total value of 9.5 billion euroswill be controlled with 50% each by Generali and BPCE and will have “balanced governance and control rights”, the two companies said in a statement.

The operation creates one of the major global champions with 1,900 billion euros of assets under managementranked ninth globally by AUM and leader in asset management in Europe with €4.1 billion in revenues. Generali Investments (GIH) will contribute over 630 billion in assets under management, while BPCE’s contribution, through Natixis Investment Managers, will be 1,300 billion, explained Generali CEO Philippe Donnet in a press conference.

The strategic reasons

The operation would create the first operator in the world by AUM in asset management for insurance clients, with a clear path to continue to develop the platform as a global leader and further expand into the growing segment of third-party insurance asset management. BPCE and Generali would retain full authority over asset allocation decisions for their respective assets.

It would come strengthened offering in the private asset segment to meet growing client expectations in these asset classes. To achieve this strategic objective, Newco would benefit in particular from the seed capital and long-term capital allocated by Generali. Global distribution capacity is highlighted to meet all possible customer needs with innovative and diversified investment strategies and solutions.

The combined entity would address one diverse customer basemade up of both groups and third-party customers. Insurance companies and pension funds would represent more than half of the assets (around 61% of AUM) with the remaining share distributed among other institutional investors, retail and wholesale clients (around 14% and around 25% of AUM respectively).

The structure of the company

Generali and BPCE expect the operation to create value thanks to synergies and growth opportunities and, from the first year, contributes positively to BPCE’s profits and to Generali’s normalized net result and cash flow. Following the closing of the transaction, the impact on BPCE’s CET 1 ratio would be neutral and the impact on Generali’s Solvency II Ratio would be substantially neutral. GIH would be deconsolidated from Generali’s accounting perimeter. In the future, BPCE and Generali’s ownership interests in the Joint Venture would be accounted for using the equity method, which results from joint control.

The Board of Directors of the new entity would be composed of an equal number of representatives of BPCE and Generali, integrated by three independent directors identified jointly by BPCE and Generali. With the creation of the Newco, the CEO of BPCE, Nicolas Namias, would assume the role of President of the Board of Directors and the Group CEO of Generali, Philippe Donnet, would assume the role of Vice President. Woody Bradford, the current CEO of GIH, would become the CEO of the global company and Philippe Setbon, current CEO of Natixis IM, would take on the role of Deputy CEO.

The opposition of Caltagirone and Delfin

The operation was approved yesterday evening by a majority of the Generali Board of Directors with the vote against by the three representatives of the shareholder Francesco Gaetano Caltagironeaccording to sources close to the situation cited by Reuters. Caltagirone and Delfin have expressed concerns about possible French control over the contributed Italian assets.

“The so-called risk of sending Italian money to France is a joke. The Our investment process has not changedthe savings of Italians are within the insurance company and the insurance company will remain in Italy which will evaluate the investments. The decision-making process will remain in Italy,” Donnet said at a press conference, refusing to comment on possible future initiatives by the two partners to hinder the operation. Also regarding a possible exercise of the Golden Power by the Italian government, Donnet said he was “very confident that the benefits of this operation for all stakeholders, including Italy, will be recognised”.