BNP in talks to create asset management titan

BNP Paribas SA is in exclusive talks with Axa SA to buy the insurer’s asset management unit for €5.1 billion ($5.5 billion), a move that will create one of Europe’s largest money managers.

The purchase is the biggest deal yet for BNP Chief Executive Officer Jean-Laurent Bonnafe, who has been returning cash to shareholders after selling US lender Bank of the West for $16.3 billion last year. 

The proposed deal would create a top player in Europe with about €1.5 trillion in assets under management, although it would still be dwarfed by the likes of BlackRock Inc. Bloomberg last month reported that the two firms were in talks for a potential tie-up of their asset management units. 

Investment firms across the globe are looking to consolidate, with many seen as too small in a business where scale is key to compete. Europe’s largest asset manager Amundi SA has been buying rivals to increase scale while Goldman Sachs Group Inc. in 2021 bought the asset management arm of Dutch insurer NN Group NV.

BNP Paribas will acquire 100% of Axa Investment Managers under the deal, which is expected to be signed by the end of the year after consultation with the employees’ representatives, it said in a statement Thursday.

For Axa, a sub-scale asset manager couldn’t support its growth ambitions in the life and savings area, Chief Executive Officer Thomas Buberl said in a Bloomberg TV interview on Friday.

“Is it big enough to really serve our needs? The answer is clearly no,” Buberl said. “Therefore, we have been looking for a partner that is like-minded.” 

The two firms will enter into a 15-year strategic partnership under which BNP Paribas will provide investment management services to Axa.

Consolidation in “the hyper-competitive asset management sector” is accelerating, Axa Deputy CEO Frederic de Courtois said on a call with reporters Thursday. That requires AXA’s investment unit to “scale up in order to remain competitive.”

A particular attraction for BNP Paribas was Axa’s pool of alternative assets, a fast-growing and still lucrative part of asset management. Alternative assets are expected to reach nearly $40 trillion by the end of the decade with firms like BlackRock pushing into the business. 

Axa said in a separate statement that it would carry out a share buyback of €3.8 billion immediately following the closing of the proposed transaction, which is expected in mid-2025. The insurer will exit the asset management business with the deal.