The US-British asset manager Columbia Threadneedle thinks it can significantly strengthen its position in Europe after acquiring the EMEA asset management business of Canadian firm BMO Financial Group. It provides more scale, especially in Europe and it provides many complementary strategies and products.
That’s what Nick Ring, who leads Columbia Threadneedle Investments’ Europe, Middle East and Africa (EMEA) regions as CEO EMEA, said in an interview with Investment Officer Luxembourg.
He said the strategic rationale behind the acquisition of BMO’s business is that there is consolidation among clients and prospects, who are growing in size and demanding more and more services, products and strategies from a smaller number of market participants.
Ring said he can broaden and deepen Columbia Threadneedle’s range of products and services. For example, BMO has a lot of complementary knowledge and expertise in the areas of responsible investing, liability-driven investing (LDI), fiduciary management and European real estate, including in Germany and France.
With the acquisition of BMO’s business, Columbia Threadneedles’ total assets under management will grow by $131 billion to $725 billion worldwide.
Coming trends
The trends Ring said he sees for the coming years in Europe are an increasing importance of ESG integration, allocation to alternative investments, including real estate, for the sake of diversification and the continuing presence of small and medium-sized asset managers that will be too big for the napkin and too small for the tablecloth. The latter will cause further consolidation.
In the interview, he said he sees BMO’s fiduciary management as the jewel in the crown. The Canadian asset manager, part of Bank of Montreal, has been active as a fiduciary manager in the Netherlands for many years, managing almost 30 billion euros in mandates of industry-wide pension funds.
“We are committed to this service and determined to grow through new investments and by bringing in our infrastructure and know-how. We think we can benefit from our longer-term commitment to the Dutch market,” said Ring.
Dutch thought leadership
In explanation, he said: “The Dutch fiduciary market is a ‘thought leader’ in the world. We can learn and even leverage on its success in the Netherlands thanks to BMO’s strong local presence.” His ambition is to bring BMO’s fiduciary knowledge and expertise to other parts of Europe in due course, explicitly mentioning the Nordics, but also the United Kingdom.
BMO’s former business will be fully incorporated into Columbia Threadneedle in the coming period and merge into a single organisation with one brand name. Columbia Threadneedle, for its part, may add to the business certain investment strategies, as well as portfolio tools, risk models and additional multi-manager capabilities. The combined company employs 2,500 people.
Through the acquisition of BMO’s business, Columbia Threadneedle will strengthen its position in the world, but especially in Europe. He mentioned responsible investment (RI) in that context: Columbia Threadneedle and BMO combine complementary strengths to create a world class RI capability based on creating value through research intensity, driving real-world change through active ownership, and partnering with clients to deliver innovative RI solutions. The integrated company will have 49 billion dollars in RI funds and strategies across asset classes.
Alternative investments
In alternative investments, there will be 47 billion dollar in assets under management, including real estate in the UK, Europe and the US, infrastructure, private equity and hedge fund offerings, and are well set to respond to increasing demand from clients for less liquid, diversifying assets both as standalone strategies and within bespoke solutions.
Columbia Threadneedle has already a longstanding relationship with large and complex clients delivering regulatory sensitive portfolios (such as Solvency II and Basel III) for insurance companies and banks as well as customised solutions for sub-advisory partners, while BMO (EMEA) has a top four LDI business in Europe as well as an established fiduciary management business – especially in the Netherlands and the UK. Together the Solutions business represents the point of entry of more than 200 billion dollar of client assets, or almost 30 per cent of the expanded AUM.