Paris-based asset manager Amundi, regarded as Europe’s counterweight to BlackRock, on Tuesday said it has agreed to take 26.1 percent stake in Victory Capital in combination with a 15-year distribution agreement under which its fund business in the U.S. will be combined with that of the Texas-based asset manager.
At Monday’s close, Victory Capital’s market capitalization on the New York Stock Exchange was 3.05 billion dollars, which values the stake eyed by Amundi at nearly 800 million dollars. Victory, headquartered in San Antonio, is an asset management firm with some 173.4 billion dollars in client assets, ranking among the world’s top 70.
Amundi, with 2,103 billion euro in assets, is Europe’s biggest asset manager and fifth-largest worldwide, trailing U.S. heavyweights like BlackRock, Vanguard, Fidelity and Capital Group.
Distribution
The deal, subject to regulatory approvals, includes a 15-year distribution agreement under which Amundi’s will distribute Victory Capital’s US-manufactured active asset management products outside the U.S., and will supply non-US manufactured products for Victory’s distribution in the U.S.
Amundi CEO Valérie Baudson said the transaction will enhance Amundi’s presence in the US and provide its clients with a broader range of US investment solutions. “Amundi will become a strategic shareholder in a US-based asset management firm with a consistent track record of development. This is a compelling proposition for our clients and our employees. It is also a value-creating deal for our shareholders.”
Amundi’s US business is largely based on the U.S. business of Pioneer Investments, the asset management arm of struggling Italian bank Unicredit which the French firm acquired in 2017 for 3.5 billion euro. Amundi retained the Pioneer brand in the US, presenting itself as ‘Amundi Pioneer,’ while absorbing the acquired businesses in Italy, Germany and Austria under its Amundi umbrella. Per 2017 Pioneer’s contributed nearly 250 billion euro in client assets.
Amundi further boosted its global asset management presence by taking over Lyxor from French bank Societe Generale in 2021. Amundi is owned for about two thirds by French bank Credit Agricole, with a minority stake listed on Euronext. In morning trade, Amundi shares traded at 63.55 euro, down 0.47 percent from Monday.
Positive impact on EPS
Amundi said it expects the deal to significantly increase its US operations’ contribution to overall results, projecting a low single-digit accretion of adjusted net income and earnings per share.
For Victory Capital, the deal opens up a new global distribution channel. David Brown, chairman and chief executive, said the structure was “carefully designed to closely align our common interests”. The firm said it anticipates to achieve an annual 100 million dollars in cost savings within a year of closing, with further synergies projected for the following year.
At Amundi, Ardea Partners is acting as financial advisor and Cleary Gottlieb Steen & Hamilton LLP and Dechert LLP are providing legal counsel. For Victory, PJT Partners and BofA Securities are acting as financial advisors and Willkie Farr & Gallagher LLP is providing legal counsel.