Reuters
Italian bank UniCredit and Spain’s Santander SA are in talks to merge their fund management businesses and create a European powerhouse overseeing some €350bn ($450bn) of assets.
Under the proposed deal, Santander Asset Management will combine with UniCredit’s Pioneer unit, with both banks owning about a third each of the new company, UniCredit CEO Federico Ghizzoni told reporters yesterday.
Private equity funds Warburg Pincus and General Atlantic, which are already partners in Santander Asset Management, will together take the remaining third of the merged entity, before exiting the venture in a few years when it will likely be listed on the stock market, Ghizzoni said.
He gave no financial details about the planned tie-up, only saying Santander had offered a “better price” than the two other bidders for Pioneer – a consortium comprising private equity fund CVC Capital Partners with Singapore sovereign fund GIC, and US fund Advent.
At least one of the proposals put to UniCredit valued the whole of Pioneer at between €2.4bn and 2.7bn, or 9 to 10 times earnings before interest, tax, depreciation and amortisation of €270mn, sources familiar with the matter previously said.
Ghizzoni said the new asset managing company will be among the top 15 fund managers in Europe and the top 30 in the world, with a strong presence in Latin America and the US, that can fully exploit the two banks’ network of 21,000 branches.
“We decided to opt for an industrial partner. The geographic and business fit is enviable, and the strategic objective is further growth for the business,” Ghizzoni said.
Santander said it had no comment.
For UniCredit, Italy’s biggest bank by assets, ceding control of Pioneer – which manages assets worth €186bn – is the latest in a string of disposals.
Like other European lenders seeking to shore up their capital base ahead of a health check of euro zone banks, whose outcome is set to be made public next month, UniCredit has been shedding assets, cutting jobs and closing branches.
Santander, the eurozone’s biggest bank, last year sold a 50% stake in its own asset management arm to Warburg Pincus and General Atlantic. The unit managed about €154bn in assets as of March. “It makes sense for Santander to keep growing the asset management business in collaboration with other partners at a moment when growth rates are steadily picking up,” said Nuria Alvarez, financial analyst at Madrid-based brokerage Renta 4.
Details of the proposed deal were still sketchy, but the tie-up would add some 20 to 25 basis points to UniCredit’s core capital ratio, a measure of financial strength, Ghizzoni said.
UniCredit’s best-quality capital stood at 10.4% of risk-weighted assets at the end of June, well below the 12.9% level of domestic rival Intesa Sanpaolo.
Over the past few months, UniCredit has listed a 34.5% stake in online bank Fineco and sold an 81% holding in web broker DAB.
It is also in talks to sell its bad loans management unit UCCMB.
These moves allowed the bank to bolster its capital in the face of a prolonged recession in Italy and European sanctions against Russia, amid rising political tensions in central and eastern Europe, a key profit generating area for UniCredit.
UniCredit had considered the sale of Pioneer in 2011 but dropped the idea after failing to conclude a tie-up with Eurizon, the fund management arm of domestic rival Intesa Sanpaolo.
