This is how Generali reassures the government about Natixis and reveals a penalty
What emerges from the press release of the Assicurazioni Generali group on the joint venture with the French Natixis on asset management
The leaders of Assicurazioni Generali are trying to reassure the grumblings of Italian politics in particular about the joint venture with the French group.
Here are the salient aspects of the press release issued today by the insurance group led by the CEO, Philippe Donnet.
We will see in the next few days whether the arguments of the Trieste-based giant will convince in particular the government majority from which doubts and criticisms have come, so much so that large sectors of the centre-right look favorably on the move of MPS (owned by the Ministry of Economy ) with the public exchange offer on Mediobanca, Generali's largest shareholder.
WHAT GENERALI SAY ABOUT THE JV WITH NATIXIS
New clarifications from Generali regarding the operation announced last January 21st, which involves the definition of a partnership in asset management with Natixis Investment Managers ( NIM ) and its parent company (the Groupe des Banques Populaires et des Caisses d'Epargne, BPCE), which “has been the subject of much attention from the press and the market”, we read in a note.
ASSET MANAGEMENT DOSSIER FOR GENERALS
Generali's press release recalls that the new company would bring together the asset management activities headed, respectively, by Generali Investments Holding and NIM, leading to the creation of a global operator with 1,900 billion euros of assets under management, in ninth place at the level worldwide and leader in asset management in Europe with 4.1 billion in revenues. The company resulting from the aggregation would be controlled – underlines the top management of the group based in Trieste – in a manner shared by the two financial institutions – each with a 50% share – operating with a joint governance structure and according to equal criteria of representation and control . Generali Investments Holding would contribute over 600 billion in assets, while BPCE's contribution, through NIM, would be 1,300 billion.
WHAT THE BOARD OF THE JOINT VENTURE BETWEEN GENERALI AND NATIXIS WILL BE LIKE
The board of directors of the new entity will be composed – underlines Leone – of an equal number of directors designated by Generali Investments Holding and NIM (i.e. 6 members designated by each shareholder), integrated by three independent directors identified jointly by Generali Investments Holding and NIM, as well as the CEO of the joint venture. The new entity would be established in Amsterdam, the Netherlands, as a neutral solution between the two partners based in different countries. Italy, France and the United States would remain the operating hubs of the new company, from which business activities would continue to be managed directly.
HOW THE JV WILL OPERATE
Generali highlights that the joint venture would be best positioned to further expand the business for third-party clients, also thanks to Generali's commitment to provide, over the first five years, a total of 15 billion in start-up capital, so-called Seed money , for the launch of new initiatives and investment strategies in the alternative investment sector (and in particular in private markets). Seed money consists of the subscription of funds and investment mandates, regulated and consistent with the asset allocation defined independently by Generali, and not in risk capital to finance asset management operating companies.
GENERALI'S NUMBERS AND THE JV WITH NATIXIS
This is nothing new for Generali: already today the group – recalls the note from Leone – has a seeding policy which envisages the investment of its balance sheet assets represented by insurance portfolios for the launch of new strategies deemed worthy and consistent with the allocation objectives of the Group's insurance portfolios. To date, Generali's seed money amounts to approximately €20 billion, and approximately €5 billion is already expected in 2025 regardless of the NIM transaction. Every year Generali's insurance portfolios generate approximately 25 billion in cash flows between repayments of maturing securities, coupons and dividends which are reinvested in the various asset classes. In addition, Generali has a three-year target (from the 2025-2027 plan) of net inflows on Life insurance products of 25 – 30 billion. “It is therefore clear that the commitment of 15 billion accumulated over 5 years represents a minority share of both Generali's total assets managed and annual reinvestment flows,” it is underlined.
THE MANAGED MASSES
Given that, to date, the assets under management relating to the companies and Italian customers of the Generali Group represent approximately 30% of the total assets managed by Generali Investments Holding, the creation of the joint venture "would have no repercussions on the continuity of the management policies of the savings entrusted by Italians to the Group companies, which remain owners of the assets and decide their allocation between the different investment strategies", we read in the document.
RELATIONSHIPS BETWEEN GENERALI AND NATIXIS
The investment definition procedure adopted by the Generali Group in fact provides that the parent company and its Board of Directors define the strategic investment guidelines of the entire Group (while the individual insurance companies with their respective Boards of Directors define their own strategy in line with the overall one of the Group), including the assignment of management mandates which contain risk limits and well-defined objectives to which the manager must comply, such as the indication of the countries, asset classes or, for example, government bonds in which allocate investments. By way of example, it is the insurance company that decides the desired allocation of government bonds and the respective quota to be distributed between the various countries, giving specific indication to the management company which remains bound to this choice. In light of this, "the operation with BPCE will have no impact on the allocation of the BTPs of the Generali Group", it is underlined.
TAX CHAPTER
Furthermore, from a tax perspective there would be no transfer of value outside Italy and there would not be, as an effect, a reduction in taxes paid in Italy. Indeed, it is plausible that the Italian tax burden will increase, at least as a result of two factors: the creation of another level in the corporate chain in Italy, with consequent further taxation of dividends; the increase in dividends expected for Generali as a result of the creation of value generated by the joint venture.
THE PENALTY REVEALED
Although the memorandum of understanding (MOU) signed last January 21st by Generali with the French company Natixis Investment Management (Nim) to create the first European asset manager in terms of revenues with a joint venture is not binding, it is foreseen – underlines Mf/ Milano Finanza – a penalty of 50 million if the agreements are not proceeded with. It is one of the elements that emerged from the indications received from Generali on the details of the document signed by the Groupe des Banques Populaires et des Caisses d'Epargne (Bpce) which controls Natixis.
POST-OPERATION NUMBERS
The operation announced on January 21st would translate into an impact in the first two years, including integration costs, of between 25 million and 50 million, before the effect of the preferential dividend expected for the French for the first two years and for an amount total amounting to 250 million. This preferential dividend in favor of Bpce would bring the overall impact of the transaction after taxes between -25 million and zero. After the end of the effect of the preferential dividend, therefore starting from 2028, the impact on adjusted net profit is expected to be higher than 50 million, also taking integration costs into account. Once the impact of these charges has been exhausted and the expected synergies are fully operational, the impact of the transaction on adjusted net profit is expected to be greater than 125 million per year starting from the year 2030.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/generali-natixis-joint-venture-governo/ on Tue, 04 Feb 2025 10:44:43 +0000.