Natixis boss targets acquisitions and hints at IPO
The boss of the French Natixis is looking for international asset managers to buy and could list his recently scandalized division to equip himself with firepower for a major purchase.
“We are clearly the consolidators of this industry,” Managing Director Nicolas Namias told the Financial Times, adding that “Asia is definitely an area of ââexpansion”.
Namias added that he had “strategic maneuverability” and that he could “list the asset management branch to finance a large merger-acquisition project”.
The group’s asset and wealth management activities – the second in Europe in terms of assets under management after its French rival Amundi – are currently concentrated in Europe and the United States.
Namias, who has been at the helm of Natixis for a year, seeks to transform the company’s fortunes after being subjected to scrutiny over his risk appetite and suffering losses, notably at his beleaguered London subsidiary H2O Asset Management.
In 2019, the Financial Times revealed that H2O, which was previously the star of Natixis’ team of asset managers, held more than â¬ 1 billion in illiquid bonds linked to controversial financier Lars Windhorst. Panicked investors withdrew billions of their money, and regulators subsequently forced H2O to temporarily halt trading in a range of its funds over concerns about investment valuations.
Natixis is seeking to sell its majority stake in H2O, which has also been hit hard by the pandemic, back to its management since late last year, although this has so far encountered obstacles from regulators.
Namias said H2O has now resumed distribution of its own products and will no longer be included in Natixis’ financial results, but declined to comment on the reasons why the French investment bank was unable to sell its stake and if she was considering other buyers.
A director and two sales representatives from Natixis have joined H2O to form a proprietary distribution team that the company wishes to increase to 15 people.
Despite the reputational damage caused by the H2O scandal, Namias defended the asset manager‘s multi-boutique model, whereby it takes majority stakes in smaller investment firms and offers them its marketing power and of distribution.
Natixis is now the largest investment manager in the world to have this type of decentralized business structure, he said, which allows the company to benefit from different investment strategies and different talents, as long as there are good compliance systems in place.
Natixis replaced its chief executive last year after a two-year term marked by doubts about the bank’s business model and risk management, and was deprived this year by its largest shareholder and French mutual bank, BPCE.
As part of an in-depth restructuring of its commercial activities, the insurance and payments branches of the company, representing around 20% of the company’s turnover and workforce, have been transferred to BPCE.
This allowed Natixis to focus on two main segments – corporate and investment banking and asset and wealth management, reducing its number of employees from 16,300 to around 12,000.
In the first half of the year, the gross operating income of the two sectors – now called “Global Financial Services” – more than doubled to reach 1.1 billion euros, supported by the post-pandemic recovery. The asset and wealth management division increased its gross operating income by 41% to 400 million euros, excluding H2O asset management, but by only 12% including the investment subsidiary.
Natixis has also sought to reduce its exposure to risky products and to diversify its areas of expertise in corporate banking in order to be less exposed to volatility in sectors such as oil, gas and aerospace. As part of this dynamic, it has extended to sectors including health.
âWe will never be the biggest investment and investment bank in all geographies,â Namias said, but âwe can expand the number of sectors [as part of] ‘selective diversification’.
Natixis’ exposure to equity derivatives, which resulted in hundreds of millions of losses in 2018 and 2020, has also been reduced, Namias said, although the bank has not stopped trading in these products as it There is still a high demand from customers.
“The business of banking is not to avoid risks but to choose your risks wisely,” he said.