Axa and BNP Paribas are finalising a €5.1bn transaction for Axa Investment Managers, which will strengthen BNP Paribas’s position in long-term asset management, according to a joint announcement made on Thursday 1 August. In addition, Axa is set to receive €300m from the sale of Select--a suit of investment solutions, including management of funds, investment management services, advisory services and investment related services--to Axa IM before the transaction is finalised. Consequently, the total estimated value of the deal is projected to be €5.4bn, representing a multiple of 15 times Axa IM’s earnings for 2023. The transaction will result in the creation of a leading European asset manager with combined assets under management amounting to €1.5trn, based on data as of 31 December 2023.
Axa that the sale of Axa IM is a strategic move to streamline its operations and focus on its core insurance activities. The divestment aims to simplify the business model and concentrate on growing Axa’s life and savings segment, which benefits from the group’s strong distribution and product design capabilities. Despite the sale, Axa will retain authority over product design, asset allocation and asset-liability management.
Financial implications
From the fiscal year 2024, Axa IM will be classified as ‘discontinued operations’ in Axa’s consolidated financial statements. Axa will continue to account for Axa IM’s contribution to the group’s underlying earnings until the deal is completed. Upon completion, the transaction is expected to reduce Axa’s underlying earnings by approximately €400m annually. However, Axa anticipates a one-off net income gain of €2.2bn from the transaction. To mitigate the earnings dilution, Axa plans to implement a share buyback programme estimated at €3.8bn, which will commence immediately following the transaction’s closure. This share buyback is expected to have a neutral impact on Axa’s solvency II ratio and no significant effect on the key financial targets.
Jean-Laurent Bonnafé, CEO of BNP Paribas, enthusiasm about integrating Axa IM into BNP Paribas and highlighted the strategic advantages of the acquisition. BNP Paribas Cardif, the insurance arm of BNP Paribas, will use the new asset management platform to manage up to €160bn of its savings and insurance assets. The combined entity will emerge as a leading European player in long-term savings asset management for insurers and pension funds, with €850bn in assets. The acquisition is also expected to enhance the combined entity’s position in private assets, driving growth among institutional and retail investors.
The transaction is anticipated to close by mid-2025, subject to regulatory approvals and customary closing conditions, including consultations with employee representative bodies. BNP Paribas expects the deal to have a CET1 impact of approximately 25 basis points and a return on invested capital exceeding 18% by the third year following the integration.
Thomas Buberl, CEO of Axa, noted the success of Axa IM over the past 25 years, emphasising its strong performance in investment expertise and sustainability. Buberl indicated that the merger with BNP Paribas would enhance Axa IM’s global reach and product offerings, particularly in responsible investing.
Renaud Dumora, deputy chief operating officer of investment and protection services at BNP Paribas, remarked that the creation of a European leader in long-term insurance and savings asset management would enable BNP Paribas to exceed €2trn in assets under management within its investment and protection services division. Dumora also highlighted the strategic benefits of combining BNP Paribas Asset Management and Axa IM’s expertise, particularly in sustainability and managing public and private assets.
A spokesperson for Axa Investment Managers told Delano: “We had 27 employees based in Luxembourg, as at end 2023.”
Updated Friday 9 August at 10:35am to add Axa IM’s Luxembourg headcount