Carrying out a successful mega-deal
Yves Perrier has won over staff to his unorthodox approach to the investment industry
Yves Perrier is a philosopher at heart. The one-time footballer who now runs Amundi, Europe’s biggest investment group, signs off meetings with analysts and journalists with his catchphrase “life is beautiful”.
When we meet, after Amundi’s announcement of its latest acquisition, Spanish bank Sabadell’s investment arm, Mr Perrier, 65, offers a pearl of wisdom. “If you want to build a ship,” he says, quoting the writer Antoine de Saint-Exupéry, “don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.”
Mr Perrier is explaining his approach to making sure large deals are well executed and integrated — especially when it comes to motivating staff through potentially traumatic transitions. Mega transactions in the investment industry have a notoriously low success rate.
The tie-ups in recent years between Standard Life and Aberdeen Asset Management, as well as Henderson Global Investors and Janus Capital, have resulted in larger but still underperforming businesses, accompanied by staff cuts, lost clients, low morale and disenchanted shareholders.
The question of how to combine investment businesses successfully has become more pressing, following a spate of recent transactions, from Franklin Templeton’s $6.5bn purchase of Legg Mason to Jupiter Fund Management’s £419m capture of Merian Global Investors.
Mr Perrier is well placed to opine on M&A, having built Amundi up through a series of deals. The largest was the €3.5bn all-cash purchase of Pioneer Investments from UniCredit, the Italian bank. It stands out as the most successful of the industry’s recent large deals and catapulted Amundi into the trillion-dollar club, the world’s biggest investment groups by assets managed.
Since the deal was announced in December 2016, Amundi’s share price is up more than 60 per cent, compared with a 16 per cent rise for S&P’s index of global asset managers. Amundi says it has not lost any significant clients or portfolio managers as a result of the deal — problems that typically blight investment tie-ups.
On a range of financial measures, the deal also stands out as a rare success story in asset management M&A. The businesses were fully integrated within 18 months — an especially quick time for such a large transaction — while the €175m of cost savings was €25m over that originally planned. Amundi’s net income is up 41 per cent to €959m since the Pioneer acquisition.
Mr Perrier formed Amundi in January 2010, bringing together the investment arms of French banks Société Générale and Crédit Agricole. He says that from the moment he and his fellow executives at the two lenders conceived the idea for the merger, they set out to become the biggest player in Europe. But he concedes that at the time the ambition was “not so realistic”.
Over the past decade the group’s assets have more than doubled, from €670bn to €1.6tn, placing it inside the world’s top 10 investment businesses.
Mr Perrier says that the early years after launching Amundi were the hardest, and lessons learnt then have made subsequent integrations easier. He says he initially struggled to convince staff that his belief that the industry needed to go through a period of what he calls “industrialisation” would work. “We were really presenting a view of the industry that was not mainstream,” he says. “Many people had doubts at the time. Today, nobody has doubts.”
He says the task of convincing staff to follow his unorthodox approach started with getting workers to buy into his ambition of becoming the leading player in Europe. Then he set about hiring managers who were convinced of the merits of the transformation and could carry it out. But he says the most important aspect was being consistent with the approach, and how it was articulated inside and outside the business. “The strategy I defined in 2010 has not changed,” he adds.
Mr Perrier has a prosaic view of the investment industry. He compares it to car manufacturing, where core components such as equities or bonds are developed by the investment managers into products or savings vehicles, and then distributed to clients through a vast network of sales channels.
“With this view, we practice value analysis in order to improve efficiency, quality and reduce cost,” he says, adding that low interest rates have put efficiency at the centre of the company’s strategy.
The emphasis on cost reduction has inevitably led to large job cuts when businesses are bought and overlapping roles are made redundant. The Pioneer deal led to 600 roles being culled. Mr Perrier says the best way to avoid staff morale being affected is to select the best performers to stay regardless of which side of the business they come from, so management cannot be accused of favouritism, and to act swiftly to limit anxiety.
Mr Perrier eschews the star fund manager culture that was so popular in the 1990s and 2000s. He insists there are “no stars at Amundi apart from Amundi itself”, and the group’s pay policy reflects that view. Managers are paid well but not excessively, with bonuses linked to personal targets as well as corporate ones.
He received a 16 per cent pay rise last year, taking his salary to €1m with a €2m bonus, which in total was 21.9 times the average worker’s pay at the group. His pay rise was criticised by Institutional Shareholder Services, the proxy advisory group, but his overall remuneration is dwarfed by his peers at the top of UK and US businesses.
As a teenager, Mr Perrier rejected the chance to become a professional footballer for French club Lyon, favouring a career in finance. He has a passion for the game, in particular Manchester United. But it is not the club’s former player and fellow amateur philosopher Eric Cantona whom he most admires. He looks instead to ex-manager Alex Ferguson for leadership inspiration. “He built not only a team, but a club and then a brand,” Mr Perrier says. “And that’s what I have tried to build with Amundi.”