UK-based M&G plans Lux operations, as Germany reported looking to woo UK banks

M&G Investments, the UK asset management arm of FTSE 100-listed Prudential, said today that it has applied for permission from the Luxembourg authorities to launch a new SICAV for retail investors outside the UK, as it looks to remain in the European investment marketplace after the UK leaves the EU. 

The M&G announcement came as Germany was reported to be considering changing its labour laws “to make Frankfurt a more attractive hub for banks looking to move staff out of London after Brexit”, according to a Page 1 story in today’s Financial Times.

The story, headlined “Frankfurt steps up bid to woo London banks after Brexit”, goes on to note that the alleged German bid to accommodate the UK’s banks came “as leading Wall Street banks indicated [over the] weekend that they were more likely to relocate operations to New York than the eurozone if they shifted them from London”, citing as one of its sources Morgan Stanley chief executive James Gorman.

Germany’s labour laws, which make lay-offs “difficult and costly”, were said to be a concern, thus the talk of changing them, the article noted.

‘Two M&G sub-funds by year-end’

M&G said that once it has its approval for its SICAV (Société d’Investissement à Capital Variable) from the Commission de Surveillance du Secteur Financier, it “hopes initially to offer two sub-funds by the end of the year”.

These sub-funds will be “new investment strategies rather than replications of existing funds”, M&G added.

Grant Speirs, M&G’s Group finance director, said the company regarded the creation of a Luxembourg outpost as “a prudent move” in light of June’s referendum on the UK’s membership of the European Union.

“A Luxembourg retail SICAV platform will enable us to offer fund strategies to European retail investors if the UK loses financial services passporting rights in several years’ time, as a result of its exit from the EU,” Speirs said.

Dublin outpost

M&G ‘s Luxembourg announcement today marks the asset manager’s second since the Brexit vote in June to suggest the company’s willingness to establish or expand its operations outside of the UK.

Immediately after the vote,  the company announced that it would look to expand its existing operations in Dublin, in order to replicate funds for overseas investors in the event that the UK’s EU departure were to affect its ability to distribute UK-domiciled funds in Europe.

M&G currently manages about £255.4bn of assets, of which approximately 10% is held by non-UK based investors.

The group stressed that it will continue to have UCITS funds domiciled in the UK and Ireland, as well as in Luxembourg.

ABOUT THE AUTHOR
Helen Burggraf
Helen Burggraf is the editor of International Investment. A US-trained journalist, she has worked in Rome, New York City and London, covering everything from the fashion and retailing industries to the global drinking water and water-treatment sector, private equity, and most recently, the international cross-border financial services/advice industry.

Read more from Helen Burggraf

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