In December 2016, Amundi acquired Pioneer Investments from UniCredit for €3.54bn. InvestmentEurope looks beyond the merger.
Amundi’s last 18 months have been eventful. In the aftermath of its €1.7bn IPO on Euronext Paris in November 2015, the Paris-headquartered asset manager passed the €1trn AUM level, merged its alternative and structured finance teams and purchased KBI Global Investors (KBIGI) as well as Pioneer Investments.
This last transaction, expected to close in the first half of 2017 with full integration by end-2018, demonstrates on the one hand Amundi’s determination – it never quite abandoned its plans after failing to acquire Pioneer in 2011 – and on the other hand its ambition to be ranked among the giants of the asset management industry.
Amundi suggested the combined entity will be number one in France by AUM, in the top three in Italy and in Austria, and with a strong position in Germany. Indeed, Italy will become the firm’s second ‘domestic’ market with €160bn under management, and Milan will become one of the group’s investment ‘hubs’.
Amundi will also benefit from Pioneer’s US platform in terms of management and distribution. A partnership with UniCredit, secured by a 10-year distribution agreement for Italy, Germany and Austria, will allow Amundi to further strengthen its position as a provider of savings solutions to retail clients in Europe.
The Pioneer acquisition is expected to reinforce Amundi’s knowhow in various asset classes such as European and US equities, emerging markets fixed income, multi-asset and US fixed income.
For Nicolas Raynaud, senior manager financial services at consultant Sia Partners, this acquisition marks a long-term trend in the consolidation of the European asset management industry.
“Mergers and acquisitions between European players aim to reach a critical size in order to gain an international dimension and compete with the largest US managers. Amundi’s move on Pioneer may speed up the consolidation trend,” he says.
The merger makes sense from a strategic and commercial point of view as it offers improved access to the Italian market and networks to Amundi, Raynaud suggests.
However, amid the benefits cost synergies planned by Amundi divide experts on the future of Pioneer once merged into the French giant.
Amundi argued that the transaction should result in full-year pre-tax synergies of approximately €180m, fully phased in within three years: circa €150m of costs synergies are expected to be realised by merging investment platforms, streamlining IT services and by rationalising administrative and back-office costs; €30m of revenue synergies are expected from potential cross selling and other revenue optimisation.
“Regarding cost rationalisation, efforts will have to be made similarly to these made at the time of the merger of Credit Agricole Asset Management and Societe Generale Asset Management that gave birth to Amundi (pre-tax cost synergies reached approximately €120m for the CAAM-SGAM merger within three years).
“Globally, the merger of Pioneer into Amundi should benefit to both players,” Raynaud highlights.