M&G Investments Luxembourg is about to integrate its two legal entities in the Grand Duchy into a single Super Manco in order to become more efficient and to prepare for further growth in Europe with the objective of generating half of total group revenue within the next few years, its managing director said.
In an interview with InvestmentOfficer.lu, Micaela Forelli, Managing Director Europe at M&G, said the business adjustment is due to happen in the next two months. Currently, M&G, which first opened its office in Luxembourg in 2002, operates with two entities: its management company and its global distribution company.
“Last year, we decided to merge the two entities because the licences we have are probably excessive for the type of work we want to be doing. So we have licences as if we were a bank, but we don’t do this sort of activity,” said Forelli. “We will merge our two companies and the Super ManCo will be the absorbing company. That is quite an important step for us to make our work more efficient.”
No need for separate distribution entity
The changes have also been inspired by recent updates in regulatory requirements for entities known as Super Mancos. M&G only distributes its own investment products, a business that can now be integrated into its management company. This means companies like M&G no longer need a seperate distribution entity that is subject to stringent regulation by Luxembourg’s CSSF.
“We wanted to make our life and the regulator’s life more easy by simplifying the structure to create one entity,” Forelli said. “The way it works now is that the Super Manco is regulated by the investment management division of the CSSF, their funds divisions. Then our global distribution company is regulated by another division of the regulator that looks at wealth managers and banking groups.”
“We have, so far, two regulatory divisions of the same regulator looking at us and going forward there will be only one.”
The transformation will not have consequences for M&G’s 60 staff members in Luxembourg, Forelli said.
One quarter of total AuM
M&G Investments Luxembourg is part of London-based global investment group M&G, established in 1931 as a UK trust company called Municipal & General Securities Company Limited. The group, listed on the London Stock Exchange under the ticker MNG, has some 370 billion pounds (440 billion euro) in assets under management with a staff of approximately 5000 people worldwide.
Its Luxembourg business manages assets worth more than 90 billion euro, about one quarter of the group total. About half of that is through traditional equities, bonds and listed products, while the other half is in private market assets. M&G Luxembourg accounts for about one fifth of the group’s revenue.
Forelli said her objective is to bring Luxembourg towards 50 percent of total M&G group revenue and total assets under management in the coming years.
Following the UK’s 2016 decision to leave the European Union, M&G decided to reform its continental European business. Until then, all its activities in Europe were either branches or subsidiaries of its UK parent.
“But that changed,” said Forelli. “We decided to increase the activity in Luxembourg and set up what’s called a Super ManCo. a super management company. And so in Luxembourg now we have pivoted all the European activities.”
‘No longer a back-office country’
Luxembourg’s attention to its financial ecosystem is one of the reasons why M&G considers it an attractive hub for its European business.
Luxembourg “is definitely no longer a back-office country,” she said. “This flexibility, and the fact of being nimble with a lot of know-how in Luxembourg, is what makes Luxembourg very effective in my view. What’s important is a very strong connection between the different actors in the industry, the networks are good. People are willing to support a common development and there is a very deep know-how and professionalism.”
M&G’s business in continental Europe will increasingly be managed out of its Luxembourg office, which recently opened a ManCo branch at its French office in Paris. “That has enabled us to start managing some mandates for institutional clients and internally clients out of the European hub. That’s another development that I see for the next few years,” said Forelli, referring to the seven countries in Europe where M&G currently has a presence.
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