Fitch: Continued Access to Networks Means Amundi's IPO Rating-Neutral
In the IPO, launched in early November, SocGen plans to float its entire 20% stake in Amundi with additional free float (up to 3%) being provided by Amundi's majority owner, CA. In addition, CA intends to sell up to 2% of Amundi shares to Agricultural Bank of China (ABC; A/Stable/bb). As a result, post-IPO, CA will hold between 74.6% and 77.6% of Amundi's shares (from currently 80%) and ABC around 2%. The remaining shares will be listed.
Upon completion of the IPO, SocGen will renew its long-standing distribution agreement with Amundi for a further five years and SocGen has stated that Amundi remains its "chosen provider of savings and investment solutions to its retail banking and insurance networks". In 2014, 12.7% of Amundi's net management fees related to its retail and insurance distribution agreements with SocGen.
Amundi's assets under management (AuM) related to SocGen's insurance business (9.3% of total AuM at end-1H15) are significantly larger than those related to retail network distribution (5.4%). However, AuM related to insurance activities are predominately low-margin fixed income assets while retail AuM are typically more diversified and more profitable, highlighting the importance of ensuring retail network distribution access.
The IPO will in our view improve Amundi's financial flexibility. Amundi stated that, post-IPO, it intends to complement organic growth with "selective and disciplined acquisitions" in the rapidly consolidating European asset management sector. Amundi has a strong franchise in French and European money market and fixed income products but a somewhat weaker franchise in equities and alternatives. At end-3Q15, 51% of its EUR952bn AuM related to bond products, 18% to money market funds, 12% to equities, 12% to diversified products and the remainder to specialised and structured products.
In addition, the sale of a small stake in Amundi to a special purpose entity ultimately owned by ABC will in our view likely improve Amundi's access to Asian clients and distribution networks, where it is currently underweight. Amundi and ABC already operate a small asset management joint venture, established in 2008.
Amundi's Issuer Default Ratings (IDRs) are driven by the company's stand-alone risk profile and do not rely on support from CA, its majority shareholder. A further reduction in CA's stake in Amundi, which we do not expect, would therefore not affect Amundi's IDRs as long as Amundi's access to CA's distribution network is maintained.