Asset managers in Europe are doing deals and gaining scale.
More European asset-management mergers and acquisitions have been announced so far this year than in the corresponding period in the three years prior, according to data provider Dealogic. Some 32 deals worth $5.2 billion have been announced so far this year.
The latest deal on the block: Dutch insurer
NV is looking to sell its
Investment Partners asset-management arm. Deutsche Bank AG’s asset-management unit, DWS Group GMBH, and French banking giant
BNP Paribas SA
are both potential bidders, according to bankers familiar with the deal process.
The unit, which manages around $360 billion in assets, is struggling to compete in a world of supermassive giants like
which manages $9 trillion, more than a quarter of which is in Europe, the Middle East and Africa.
Europe has a deep pool of savings and the business of managing money is increasingly bifurcating between specialist boutique asset managers and bigger players that have scale to keep costs low. That puts firms like NN’s business and others sandwiched in the middle at a disadvantage when competing for assets on the basis of performance or low-cost management fees, bankers say.
The same rationale applied to a deal struck in April by French asset manager Amundi SA to acquire Lyxor Asset Management from
Société Générale SA
for €825 million, equivalent to around $1 billion.
Investors welcomed the deal, sending Amundi’s shares up 3% the day it was announced. Under the deal, Amundi will get access to €124 billion of Lyxor’s assets under management. Amundi is one of the few European asset managers, along with Germany’s
with more than $2 trillion in assets.
The goal for many asset managers is to get big enough to be relevant, said Mike Werner, an analyst at
Getting scale is important because they need to offer wider varieties of products and strategies to clients, who are increasingly cutting back the number of firms they do business with, Mr. Werner said.
For asset managers who specialize in managing ETF-style passive funds, which charge very low fees for tracking indexes, scale is even more important. The more assets they can attract and the bigger they get, the more they can lower their fees. Passive managers generally compete on fees, not performance, so being able to reduce costs is paramount.
BlackRock is the one to beat in Europe among passive players, ranking first among ETF providers with a 44% market share and €463 billion in ETF assets as of Dec. 31, according to research firm ETFGI.
Lyxor and Amundi occupy the third and fifth spots, respectively. After its deal closes, Amundi will be catapulted to second place with €142 billion in ETF assets and a 14% market share, the company said. Amundi’s shares are up 11% this year.
Haley Tam, an analyst at
said the “urgency has returned” to do deals after asset managers hunkered down during the worst of the coronavirus pandemic last year.
She and her analyst colleagues at Credit Suisse expect a recent wave of global consolidation to continue, they wrote in a June note. In Europe, they expect potential buyers to include DWS, UBS Group AG and Standard Life Aberdeen PLC.
In early 2019, DWS and UBS discussed combining their asset-management businesses, The Wall Street Journal reported, though the talks didn’t progress.
“We are going to enter into a consolidation momentum in the M&A area and asset management, so therefore we are actively looking around,” Asoka Woehrmann, chief executive of DWS, said in April. DWS, whose shares are up 17% this year, has around $1 trillion in assets.
—Ben Dummett contributed to this article.
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