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French insurer Axa has entered exclusive talks to sell its investment management arm to BNP Paribas for €5.1bn, in a deal that would create one of the largest players in Europe.
The anticipated transaction would create a business within the French bank with €1.5tn of assets under management, which would continue to provide investment services to Axa under a long-term partnership.
If finalised, the deal would mark the latest example of consolidation in the European asset management industry as companies seek acquisitions to boost their scale and access new growth areas.
BNP chief executive Jean-Laurent Bonnafé said its asset management business would have a “critical size in public and alternative assets”, allowing it to “serve its customer base of insurers, pension funds, banking networks and distributors more efficiently”.
Amundi will remain Europe’s largest pure play investment management business. It has almost €2.2tn in assets under management.
Axa said the move to sell its asset management arm was intended to simplify operations and focus on its core insurance business.
Thomas Buberl, Axa chief executive, said the decision had been made “in the context of a rapidly consolidating and highly competitive asset management industry”.
He added the proposed deal would create a “global asset manager with a wider product offering and a mutual objective to further their leading position in responsible investing”.
Under the anticipated terms of the deal with BNP, the insurer would receive cash proceeds of €5.1bn for its investment management arm, plus €0.3bn for the linked sale of Select, an Axa unit providing fund services.
The planned acquisition is a major one for BNP, which has built up a war chest from the $16.3bn sale of Bank of the West in the US, announced in 2021.
BNP has partly used the proceeds for share buybacks and had previously signalled an appetite for small deals.
Axa said part of the proceeds from the sale of its investment management arm would be used on share buybacks.
The disposal is expected to result in a €2.2bn one off net income gain for Axa, but also reduce underlying earnings by €0.4bn on an annual basis.
Axa released its half-year results for 2024, reporting that asset management revenue rose 5 per cent compared with the same period in 2023, driven by higher management and performance fees.
Revenue from property and casualty insurance increased 7 per cent. Net income rose 5 per cent to €4bn.
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