Amundi’s planned acquisition of Lyxor highlights the broader shift away from active management towards passives in Europe, according to a research note by Fitch Ratings.
The note said the acquisition was in line with structural market trends with passives performing well during the coronavirus volatility despite this being perceived as a suitable market for active managers.
Highlighting this, the ratings agency pointed to a Morningstar report which found that only 49% of active US funds outperformed in 2020.
The note comes after Europe’s largest asset manager announced earlier this month plans to purchase Lyxor from Société Générale for €825m.
Lyxor is currently the third largest ETF issuer in Europe with €77bn assets under management (AUM). The deal is set to create a combined European ETF business with €142bn AUM and a market share of 14%, the second largest behind BlackRock and ahead of DWS.
The acquisition is potentially the most important in the European ETF market since BlackRock secured the iShares business from Barclays Global Investors for $13.5bn in 2009.
The note said it expects the deal to be broadly neutral for Amundi’s credit rating despite incrementally higher operation risk resulting from the integration.
However, it noted how Amundi has made a number of integrations recently following the acquisition of Pioneer Investments in 2017 and Sabadell in 2020.
The acquisition is expected to complete by February 2022 with Fitch adding the integration will be finished within 18 months of this.
“Amundi's ratings continue to be underpinned by a leading European franchise, improving diversification, strong distribution networks and sound financial metrics,” Fitch said.
Consolidating Lyxor’s ETF range key for Amundi in battle with rival DWS
The ratings agency added underlying profitability should be maintained with the firm targeting cost synergies of €60m and revenue synergies of €30m to be realised within three years of completion.
