The Hong Kong private equity firm plans to market Dexia funds in Asia
Dexia agreed to sell Dexia Asset Management to Hong Kong-based private equity firm GCS Capital for €380 million ($496 million), both companies announced Thursday.
Brussels-based Dexia Asset Management, which has about €80 billion in assets under management and 550 employees worldwide, will continue to operate mainly from Europe, according to the news release.
In a separate move, GCS also agreed to become a preferred money management partner of Industrial and Commercial Bank of China. ICBC is China's largest bank by assets.
Dexia AM's products “will become available to investors in Asian markets through ICBC's branch network,” according to a news release issued by GCS. “Furthermore, GCS Capital also sees a significant opportunity to offer Asia-focused solutions to DAM's existing European and Australian investors.”
Mike Powell, senior partner of GCS Capital, said in the GCS news release: “GCS Capital's clear growth strategy is to leverage the combined strengths of the existing platform and our strategic partners to broaden distribution and enhance product offerings across additional geographic regions.”
Mr. Powell and other executives at GCS Capital and Dexia declined further comment pending completion of the transaction, which is expected within the next few months.
Several analysts and bankers who are familiar with the transaction said the price appears to be fair. According to estimates, the agreed transaction is valued at about 7 to 7.5 times EBITDA (earnings before interest, tax, depreciation and amortization). While money managers have historically traded at higher valuations of between 8 to 9 times EBITDA, the price paid for Dexia AM appears “pretty much in line” with more recent transactions, including 2010's acquisition of Columbia Management by Ameriprise Financial from Bank of America, one banker said.
“It's a good sign” for potential sellers of money management M&A in 2013, he said. “This establishes a price that looks reasonable.”