In the Podcast: Christian Pellis and Petra Salesny on Amundi's Growth Ambitions in Germany's Private Markets
By Phil, Frankfurt
Investment firm Amundi aims to double its private market assets in Germany
French asset manager Amundi is eyeing a substantial growth spurt in Germany's private markets, aiming to amplify its managed assets to a whopping 5 billion euros. Christian Pellis, Amundi's Germany CEO, disclosed this target in the podcast "Betting Billions" of Börsen-Zeitung. This ambitious goal centers on assets managed for institutional clients. Meanwhile, private investors will be wooed via the Eltif 2.0. Pellis, however, is suspected to keep mum about the exact potential of these private investors.
Amundi's growth target could be a reality if the rumors about a French takeover of Allianz Global Investors (AGI) are to be believed. The Munich insurance giant Allianz is reportedly seeking a partner or a buyer for its asset manager. Amundi has been named as one of the prime contenders, but recent reports suggest that negotiations with Allianz and Amundi have hit a snag as per Bloomberg.
Should the takeover of AGI materialize, the company would bring approximately 95 billion euros in assets under the private asset classes of Private Equity, Private Debt, Real Estate, and Infrastructure to the table. Amundi boasts around 70 billion euros in this segment. Pellis declines to comment on the takeover reports in the podcast, instead focusing on the organic growth targets Amundi sets for itself in various asset classes.
M&A is part of Amundi's growth plans in the German-speaking region. Amundi announced the acquisition of Aachen technology company Aixigo merely weeks ago. In February of this year, Amundi bought the Swiss asset manager Alpha Associates. "We invest in Private Equity funds, buy secondaries, and make direct co-investments," says Managing Director Petra Salesny in the podcast. Alpha Associates employs a multi-manager strategy, investing as a fund of funds in other private market funds.
Private Markets: Amundi yet to set up direct business in Germany
According to Salesny, 20 out of the 70 billion euros of Amundi are attributable to this strategy. Amundi has not yet established a direct business in Germany, a fact confirmed by Pellis. "I don't think we want to completely abandon it, but we don't have it at present," says Pellis. He remains optimistic that Amundi can compete favourably with many customers utilizing its existing offerings. Outside of Germany, Amundi already possesses a direct business, which, according to Salesny, accounts for the remaining 50 billion euros. The portfolio includes Private Equity, Infrastructure, and a Private Debt business.
Alpha Associates was formed in 2004 as part of a management buyout from Swiss Life. The Swiss insurer had, according to Salesny, departed from the private market business at the time, joining a lineup of insurance giants that have retreated from this arena. Apart from AGI, Allianz and Axa are also among them. This year, Axa sold its investment manager to BNP Paribas. Salesny, however, contests the notion that insurers generally struggle with the private markets sector: "Every insurance firm pursues its own unique strategy."
Pension institutions still offer potential, especially in the Private Debt arena
Amundi still sees potential in pension institutions. A recent survey by Amundi and Create Research among 157 global pension institutions with 1.97 trillion euros in managed assets reveals that around three-quarters are already invested in private market assets. 86% of respondents intend to continue investing in this arena over the next three years.
Slightly over half (55%) favor the asset class Private Debt, with Direct Lending, Real Assets, and Distressed Debt being the most popular investment strategies. Private Equity ranks second among the most popular private asset classes, followed by Infrastructure (40%) and Real Estate (38%). Venture Capital currently ranks lowest within the Private Markets, with just 28%.
Private Markets streak under the microscope
Amundi's research also alludes to the fact that private markets are under scrutiny, and future returns are likely to be lower than in recent years. With institutional investors tapering off, asset managers are aiming to attract retail investors as a new source of funds. As other competitors this year, Amundi has launched a European Long Term Investment Fund (ELTIF).
The asset management industry justifies this push as "democratization" of private markets. Previously, there was no suitable instrument for retail investors to access private markets. The ELTIF 2.0 allows semi-liquid evergreen structures, where retail investors can invest monthly and immediately begin investing. They can also exercise their redemption rights quarterly. However, it's not guaranteed that retail investors can always exit at their desired levels. A recommended minimum holding period is in place to achieve the targeted return. Private market investments will never be as liquid as liquid assets.
Education is crucial, now more than ever
It's critical for banks selling the ELTIF to educate investors about these risks. "I believe banks' understanding of private market investments is quite sound," says Salesny. According to Pellis, advisors are also trained by Amundi. Education has never been more important, as the entry barriers for retail investors have reduced significantly with the revised ELTIF, with the recommended minimum investment sum now at a mere 1,000 Euros.
- To achieve its growth target, Amundi might consider investing in real-estate, private debt, infrastructure, and private equity, particularly if the rumors about acquiring Allianz Global Investors (AGI) are true.
- As retail investors are being attracted to private markets through new instruments like the ELTIF 2.0, it's essential for businesses, such as banks, to provide adequate education about the associated risks to potential investors.
