BNP Paribas in Talks to Buy AXA Investment Managers for $5.8B

AXA has entered exclusive negotiations to sell its asset management arm AXA Investment Managers (AXA IM) to French financial services giant BNP Paribas for a total consideration of €5.4 billion ($5.8 billion), as the French insurer seeks to focus on its core business.

As part of the proposed transaction, AXA and BNP Paribas will also enter into a long-term strategic partnership under which BNP Paribas would provide investment management services to AXA, with AXA set to retain full authority over product design, asset allocation, and asset-liability management decisions.

“AXA Investment Managers has been a homegrown success story for the AXA Group,” AXA CEO Thomas Buberl said in a release on Thursday. “In the context of a rapidly consolidating and highly competitive asset management industry, the Group has considered different options to support the future development of AXA IM and to best align with the strategic goals of AXA to further simplify its business profile and grow its insurance businesses.”

The combination of AXA IM, which managed €850 billion of global assets as of 31 December, with BNP Paribas’ existing asset management business would give BNP Paribas oversight of €1.5 trillion in combined assets under management.

Building an Asset Management Giant

The transaction value represents a multiple of 15 times AXA IM’s 2023 underlying earnings. In addition to cash proceeds of €5.1 billion, AXA is set to receive a €300 million consideration from the sale of Select – a unit which offers fund management, investment management, and advisory services to retail customers in France, Belgium, Hong Kong, and Indonesia – to AXA IM prior to the closing of the proposed transaction.

The transaction is expected to be signed by the end of the year and finalised by the second quarter of 2025, pending customary closing conditions, including the information and consultation of employee representative bodies and receipt of regulatory approvals.

BNP Paribas expects the combined business to become the leading European manager of long-term savings assets for insurers as well as pension funds, with the platform benefiting from AXA IM’s strength and track record in private assets, which will drive further growth with both institutional and retail investors.

“This project would position BNP Paribas as a leading European player in long-term asset management,” BNP Paribas director and CEO Jean-Laurent Bonnafé said in a separate release. “Benefiting from a critical size in public and alternative assets, BNP Paribas would serve its customer base of insurers, pension funds, banking networks and distributors more efficiently. The strategic partnership entered into with AXA, the cornerstone of this project, confirms the ability of both our groups to join forces. This major project, which would drive our growth over the long-term, would represent a powerful engine of growth for our Group.”

Upon completion, the proposed transaction is expected to reduce AXA’s underlying earnings by around €400 million on an annualised basis. AXA also estimates the deal to generate a one-off net income gain of €2.2 billion.

AXA intends to offset the earnings dilution from the proposed disposal with a €3.8 billion share buyback, which will be launched immediately following the closing of the proposed transaction.

Active in Japan

In Asia, AXA IM, which invests in real estate through its AXA IM Alts arm, has made a string of investments in Japan in recent years. The unit managed €184 billion of global real estate, private credit, infrastructure and private equity assets as of 31 March.

In June, AXA IM Alts acquired a 183-key hotel in Kyoto for $44 million with plans to refurbish and rebrand the asset as the Holiday Inn Kyoto Gojo.

“Japan is a key global market for AXA IM Alts, and one where we will look to pursue our deployment in 2024, targeting those sectors benefiting from supportive technological, urbanisation and demographic trends,” Laurent Jacquemin, AXA IM Alts’ head of Asia Pacific said in a statement announcing the deal.

Last year, the fund manager acquired two senior housing properties totaling 331 rooms in the northern island of Hokkaido and a portfolio of 33 apartment assets across Tokyo, Greater Osaka, and Nagoya.

Those deals followed AXA IM Alts’ 2022 purchases of a 800-bed portfolio of nursing homes in Tokyo, Osaka and Aichi, a 1,482-unit residential portfolio in Greater Tokyo and Osaka, four student housing properties near universities in Greater Tokyo, as well as a pair of Tokyo apartment buildings.