European financial institutions, traditionally the dominant owners of money management businesses on the Continent, also are at the heart of current M&A activity, according to bankers and analysts.
“I think the bank-owned asset management paradigm is now dead — if a bank is going to continue to own an asset manager it will seek to reassure clients and staff that the company is actually run as an independent,” according to Kevin J. Pakenham, managing director in the financial institutions group at Jefferies International Ltd., London. “The (financial) crisis ... proved not only that banks are poor at managing their own balance sheets, but also that they are not much good at managing a (people-oriented) business like asset management. M&A in the sector is reflecting these new perceptions.”
In the latest M&A development, UniCredit Group's plan to “consider options” including a sale of its money management subsidiary Pioneer Investments was put in doubt when CEO Alessandro Profumo abruptly resigned in September amid controversy surrounding the Libyan government's 7.6% stake in the firm. Mr. Profumo was replaced by Deputy CEO Federico Ghizzoni on Sept. 30.
However, according to a company statement in response to questions: “UniCredit and its advisers are currently carrying out a thorough strategic review of Pioneer Investments. ... The strategic review process is continuing despite the change in the UniCredit leadership team.”
“Asset management is, and will remain, an important part of UniCredit's client portfolio, and it is a priority that the outcome of this review provides UniCredit with the highest quality asset management possible,” the statement said.
According to several analysts who cover UniCredit, the company will likely proceed to consider a sale of Pioneer or merger with an existing manager. Pioneer had e185 billion ($251 billion) in assets under management as of June 30.
“No matter who the new CEO is, it won't change the fact that Pioneer is not big enough in the current (asset management) landscape,” said Ronny Rehn, banking analyst who covers UniCredit at Keefe, Bruyette & Woods Inc. based in London. “It lacks scale.”