Amundi, Allianz and the capricious M&A

It’s a somber story from the beginning: St James’s Place, Britain’s largest asset manager, canceled its annual lavish staff gathering at London’s O2 Arena in a bid to cut costs and repair its image, and in January We are planning to hold an online internal meeting.

And one of the big interviews: Andrew Boles, chief investment officer at fixed income giant Pimco, said the euro would be weighed down in the aftermath of Donald Trump’s trade war, as policymakers seek to soften the blow to the eurozone’s woes. It warned that interest rates in the region could return to “emergency levels.” economy.

In today’s newsletter:

Allianz suspends talks with Amundi to form €2.8 trillion wealth management giant

New ‘anti-woke’ ETF makes Starbucks its first target

Public pension systems and wealth funds increase investment in private markets

Allianz suspends deal negotiations with Amundi

Just Saturday morning, Amundi and its largest shareholder, Credit Agricole, were in exclusive talks with Allianz over plans to combine the German insurer’s 560 billion euro investment management arm with its larger French rival.

The deal, which was expected to value Allianz Global Investors at more than 6 billion euros, was the culmination of more than a year of on-again, off-again talks between the two parties, and the deal, which was expected to value Allianz Global Investors at more than 6 billion euros, was the culmination of more than a year of on-and-off talks between the two parties. It will form a huge company. Assets under management.

On Saturday afternoon, Allianz unexpectedly suspended negotiations, Olaf Storbek and I revealed later that day.

While this hiatus may be temporary, it does illustrate the difficulty of pulling off large-scale mergers and acquisitions in the asset management space, amid a wave of consolidation across the industry. It happened.

One of the recent deals that has almost everyone in Europe eyeing potential dance partners is BNP Paribas’ €5 billion acquisition of AXA Investment Managers, creating a €1.5 trillion European champion . (Amundi also negotiated to buy AXA Investment Managers earlier this year, but the two sides were unable to agree on terms.)

Investment managers around the world have long turned to M&A to pursue scale, growth markets and new clients as rising costs and falling fees squeeze profits. The pressure is particularly acute in Europe right now, as major U.S. firms such as BlackRock, Goldman Sachs Asset Management and JPMorgan Asset Management continue to move into European markets.

Meanwhile, drivers for further consolidation are likely to be driven by banks and insurers weighing their investment management efforts, either doubling down (legal/general), entering into strategic partnerships (generali), or exiting the business altogether ( NN Group). .

The main sticking point between the Allianz and Amundi camps appears to be a dispute over the structure of the partnership and an agreement on who will control the expanded organization. Of course, scale is not enough, and so far neither side seems to have made it clear publicly what the strategic logic of the partnership is for customers.

Amundi views the potential deal as an “acquisition” of Allianz Global Investors, but some people said the Germans were hoping for a partnership that would lead to higher asset management income.

René Magritte might have said this on behalf of Allianz: “Ceci n’est pas une acquisition”.

New ‘anti-woke’ ETF takes aim at Starbucks

Wall Street investors are poised to profit from the conservative turn that will accompany President Donald Trump’s return to the White House.

A new fund aimed at punishing “woke” companies is just the latest example, write my New York colleagues Amelia Pollard and James Fontanella Kahn.

Last week, Azoria Partners announced a new actively managed fund that excludes S&P 500 companies that consider diversity, equity and inclusion in their hiring processes.

What is your first target? Starbucks. Azoria’s founders made the announcement Thursday at an event at President Trump’s Mar-a-Lago resort in Florida. The event was attended by Ark Invest founder Cathie Wood and Kevin Roberts, the ideologue behind the Trump administration’s Project 2025 blueprint.

In an interview, Azoria co-founder James Fishback talked about diversity hiring practices, saying, “Whether or not they voted for President Trump, Americans want to hire companies that conduct woke science experiments.” I don’t want to invest in it,” he said. “We represent shareholders here, and human capital employment quotas hurt all shareholders.”

Mr. Fishbach’s foundation does not yet control the money, meaning the Starbucks campaign does not have enough financial clout to influence the retailer’s decisions. Powerful activist fund Elliott Management recently acquired a large stake in the chain, spurring a CEO change earlier this year.

Unlike activist hedge funds that buy stocks in companies to agitate for change, Azoria advances its objectives by removing companies from indexes and publicly claiming that DEI policies are negatively impacting stock prices. Probably.

The strategy borrows from the so-called Environmental, Social and Governance Fund, which excludes investments in polluting industries and has been attacked by many conservatives.

Is anti-woke investing a fad or a legitimate way to make money? Please email us: [email protected]

This week’s chart

Public pension schemes and sovereign wealth funds plan to pump more money into private markets next year, despite warnings from financial watchdogs about the risks posed by the sector’s rapid growth, Mary McDougall and Sun Yu he writes.

Half of the funds surveyed by UK think tank Official Monetary and Financial Institutions Forum (Omfif) expect their exposure to private credit to increase over the next 12 months, up from around a quarter last year. .

Almost 60% of funds say they plan to increase their allocation to infrastructure, and more than 40% expect to expand their positions in private equity. Omfif surveyed 28 pension and sovereign wealth funds around the world that manage $6.5 trillion in assets.

The craze for private markets has raised concerns about a potential bubble, with investors already pouring large amounts of money into these assets in search of higher returns and lower volatility since the 2008 global financial crisis. It’s happening despite the fact that it’s happening.

“Until something bad happens, public funds will continue to allocate more money to private markets in general,” said Paul O’Brien, trustee of the $11.2 billion Wyoming State Retirement System. “Nothing bad has happened yet.”

The California Public Employees’ Retirement System will adjust its strategic asset allocation this year, increasing its private equity exposure target from 13% to 17% of the fund and increasing its private debt target from 5% to 8%. The aim was to improve profits. percent.

Meanwhile, AustralianSuper’s annual report for this year said: “Unlisted assets are expected to outperform their listed equivalents over the medium to long term.”

5 stories you can’t miss this week

BlackRock, the world’s largest asset manager, has agreed to acquire HPS Investment Partners in a $12 billion deal as it races to expand its share of the fast-growing and lucrative private investment market.

Mubadala Capital, the asset management arm of Abu Dhabi’s state-owned investment fund, has acquired a significant stake in Los Angeles-based credit management firm Silver Rock Financial, aiming to build a global player in private capital based in the Middle East. to get to.

Hedge funds such as Jeffrey Talpins’ Element Capital and Kenneth Tropin’s Graham Capital Management have made big profits by betting on market volatility surrounding last month’s U.S. presidential election.

The Pension Protection Fund, the UK’s pension lifeboat, wiped £283bn off its estimate of funding levels for defined benefit pension schemes, but said the net funding position remained “robust”.

Investors have poured about $140 billion into U.S. stock funds since last month’s election, with traders betting that President Donald Trump’s administration will roll out major tax cuts and reforms that will benefit U.S. businesses.

and finally

Naomi Campbell has become the first model to be honored at the Victoria and Albert Museum’s retrospective exhibition, Naomi: In Fashion. Meanwhile, I’ll also be booking tickets for the new immersive exhibition ‘VOGUE: Inventing the Runway’ at the Lightroom in King’s Cross, London. Narrated by Cate Blanchett, explore the history of fashion runway shows.