Natixis/BPCE: au revoir, not adieu from funds giant
Going private will spare one of Europe’s largest asset managers further shaming public scrutiny
Natixis, a niche investment bank combined with a large asset manager, is shuffling off the public stage. On Thursday, Laurent Mignon, boss of BPCE, announced its holding in its listed subsidiary had risen to 89 per cent. The French co-operative bank should exceed the threshold for squeezing out minority shareholders on Friday.
The curtain is falling on a lacklustre performance. Natixis listed on the Paris stock market in December 2006 at €19.55 per share. BPCE’s €3.7bn offer to buy out minority shareholders priced the stock at €4.
That was equivalent to tangible book value and therefore a reasonable offer. The company was only set to make a 9 per cent return on tangible equity in 2022, according to Barclays.
Going private will spare Natixis further shaming public scrutiny. The group suffered large losses on derivatives and on H20, a subsidiary linked to controversial financier Lars Windhorst. BPCE will restructure the business away from the spotlight, bringing the insurance and payments businesses within its own retail division.
The asset and wealth management arm has hefty assets under management (AUM). For these, it targets compound organic growth of at least 3 per cent a year in the four years to 2024. Ominously, given recent history, it plans to expand in “high-alpha” strategies. Sustainable investment and impact investments will offer another modish focus, supposedly set to account for half of AUM by 2024.
Going private theoretically deprives Natixis of equity ammunition for acquisitions. In reality that currency would have had little appeal given the group’s chequered history.
Paradoxically, Natixis is one of Europe’s largest asset managers. In this industry scale generally brings success — unless a decentralised model limits brand recognition. That model also makes cost control harder at a time when margins are falling.
A worldwide shift into passive investment has put consolidation pressure on active managers. Natixis’s fund management arm could participate more easily if it was spun off as a standalone business without the dragging anchor of the investment bank.