Crédit Agricole, ABN Amro, and “one or two Swiss private banks” have been named as finalists in the bidding process for the acquisition of Belgian wealth management and investment bank group Degroof Petercam, French business daily Les Echos reported on Friday, citing multiple sources.
Dutch bank ING and Belgian state-owned bank Belfius have reportedly “dropped out” of the auction, along with some investment funds, the financial newspaper added, citing insiders. Final offers are expected to be submitted before the month of August, it stated.
Degroof Petercam confirmed late April that it is considering a major reshuffle of its ownership structure that could potentially lead to a new majority shareholder. Some of the existing owners, mainly Belgian noble families but also undefined “financial partners”, have indicated they want to sell their shares.
One to two billion euro deal
A deal could be worth between one and two billion euro, according to Les Echos. A bank analyst at Kepler Cheuvreux regards a rough valuation of 1.1 to 1.3 billion euro, or 15 to 17 times net profit, as “realistic”.
The firm is understood to have appointed Royal Bank of Canada as investment bank coordinating the bid process. “The board of directors of Degroof Petercam has been informed that certain existing shareholders are looking to reinforce their stake in the company and that other existing shareholders may re-evaluate their current position,” Degroof said in May. “In this respect, a mandate has been given to an investment bank to analyse how the ownership restructuring would benefit the interests of the company.”
That statement was particularly noteworthy given that the firm in recent years never commented on market talk about a possible sale.
Degroof Petercam manages about 43 billion in assets, nearly half of which via its Luxembourg branch. Degroof currently is majority owned by a group of Belgian shareholders, including Guimard Finance, CLdN Finance, and Belgium’s Philippson, Siaens, Schockert, Haegelsteen, Peterbroeck and Van Campenhout families. Together they control more than 72 percent of the firm, while a group of unidentified “financial partners” owns about 22 percent.
Existing owners looking to sell
Degroof Petercam’s history dates back to 1871 and employs some 1,400 people - a good 400 of which work from Luxembourg. The firm was created in 2015 through the merger of Degroof and Petercam. Its board of directors since then has comprised representatives of the families that owned stakes, including the likes of Baron Alain Philippson, whose grandfather founded Degroof in 1871 and who stayed with the firm for more than 45 years. Although he retired in 2020, 1939-born Alain Philippson still acts as pater familias, giving him a major say in his family’s finances including shares in the bank.
Although it remained profitable, with a decline of 16 percent in 2022 operating profit, Degroof in recent years has struggled to comply with increasingly stringent anti-money money laundering requirements in an increasingly competitive landscape that is pressed by stringent regulation. Luxembourg’s financial supervisor CSSF in December issued a fine of 1.56 million euro after it found the firm to be in “non-compliance with its professional obligations”. The fine still is the second-largest on record issued by CSSF.
Insiders remain tight-lipped
Four potential buyers reportedly are still in the running to acquire Degroof Petercam, either wholly or partially, while interested parties such as ING and state-owned Belfius are reported to have dropped out. Investment Officer reached out to several involved parties in search of additional information.
Belfius had been mentioned for months as a potential acquirer of Degroof Petercam, but it appears that they are no longer among the remaining candidates. Ulrike Pommée, Head of Media Relations at Belfius, said she could not provide any comment on the matter. “No comment” were her exact words.
When asked about Belfius’ plans for expanding its private banking services, an area where the bank has ambitious goals, she stated that the institution is currently experiencing strong organic growth. “We are doing well in Wealth Management and asset management and have recently significantly increased our market share.” This implies that Belfius does not necessarily see acquisitions as a requirement for further growth in this segment.
Arnaud Denis, Head of External Communications at Degroof Petercam, was equally categorical and stated that he could not provide any additional comments on the matter. “We have issued an official statement, and I cannot add anything to that,” he conveyed over the phone. This is understandable as the takeover process is still ongoing, and the group itself cannot take a position. The official statement, however, reveals little new information.
Degroof Petercam states that “as previously indicated, the board of directors of Degroof Petercam is currently analysing how a possible restructuring of the shareholding could benefit the interests of its clients, employees, shareholders, and other stakeholders, in light of certain existing shareholders wishing to strengthen their stake in the company and others potentially reevaluating their current position.” In this strategic evaluation, the bank is assisted by the Canadian bank Royal Bank of Canada, which has been mandated by the board of the private bank.
The statement further emphasises that “this analysis is being conducted at the board level with due care and in strict confidentiality.”
A spokesperson for Crédit Agricole in Paris said the firm does not want to comment on the press report.
A spokesman at ABN Amro in Amsterdam did not respond to a request for comment.