Asset management: an activist’s playground

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Nelson Peltz plays the matchmaker

Activist investor Nelson peltz is no stranger to the asset management industry. And it’s not just because he owns a hedge fund.

After Trian Partners has achieved a solid return on its investment in Legg Mason following his Acquisition of $ 6.5 billion through Franklin templeton, The Peltz group has now set its sights on Invesco and Great Britain Janus Henderson.

The New York-based company has a nearly 10% stake in both asset managers and speculation is rife that Trian is trying to play matchmaker between the two, although not everyone is convinced that would be a great idea.

Nelson Peltz, Managing Director of Trian Fund Management © FT montage / Bloomberg

Whether the two companies team up or not, there is no doubt that Trian wants to see more consolidation in the asset management industry – in fact, it has a fund specifically designed for this purpose.

And Trian is essentially using the same playbook he made for Legg Mason, where Peltz played a key role in his deal with Franklin Templeton.

On Thursday, Invesco said it granted Trian three board seats – addition of Peltz and Ed garden, the group’s investment director, as well as Tom finke, managing director of the $ 354 billion fund group Barings.

As with Legg Mason, the appointments involve Invesco expanding its board to 12 directors, avoiding a proxy battle. The appointments of Peltz and Garden to the board were obvious. More interesting is the appointment of Finke.

Barings is a subsidiary of Mass Mutual, the US insurance company that happens to be Invesco’s largest shareholder. Appointing a board member who will know the group’s main shareholder is not a bad idea. In addition, Finke, who is leaving Barings, has overseen several M&A transactions in the industry during his career.

Invesco’s concession to Trian is not a surprise either. The longtime CEO of the manager Martin flanagan is well aware that companies in its sector will find it difficult to survive if they do not come together. He said the FT last year that one in three asset managers would disappear as increasing pressure on fees and rising costs had negative consequences.

Martin Flanagan, Managing Director of Invesco © Bloomberg

While Invesco, who won the not-so-coveted title of world’s least-selling fund manager last year, and Trian seem to get along well, little has been said about the hedge fund’s plans for Janus.

The London-based company said it was only aware of Trian’s involvement the day before its official disclosure and gave no indication that it was in discussions with the hedge fund. If Trian wants a deal between the two, it will probably require both companies to play the ball.

Ant Group: stuck in the mud

It was supposed to be the best week for Group of ants.

But Chinese regulators stopped the country’s largest fintech group on track to complete largest initial public offering in history. (Catch up on the DD blanket of the debacle here.)

Now lawyers involved in the deal and investors say it could be delayed by at least six months and its valuation has fallen sharply thanks to new regulations, writes Hudson Lockett and Primrose Riordan of the Hong Kong FT.

The group’s shares, which were to raise $ 37 billion, were to start trading Thursday in Shanghai and Hong Kong. The Shanghai Stock Exchange suspended trading on Tuesday night, a day after Beijing announced draft rules that could weigh heavily on Ant’s vital lending activity.

Market capitalization bar chart (in billions of dollars) showing that the IPO of Ant would have valued it more than the biggest banks in the world

While Ant currently acts primarily as a high-tech link between consumers and financial firms, the new regulation would require the payment platform controlled by Ali Bababillionaire founder Jack Ma provide at least 30 percent of loan funding.

This could eventually make its business model closer to a (highly regulated) bank and leave Ant’s balance sheet more exposed in the event of loan deterioration.

“Yes [the new rules] be strictly executed, Ant would be worth less than half of what it is now, ”said a Shanghai-based fund manager who endorsed Ant’s IPO. And if the last four days are any indication, the situation could change even more drastically over the next six months.

Ant’s latest implied valuation of $ 316 billion – nearly a fifth higher than China’s ICBC banking monster – not the only thing that is likely to decrease as regulators keep the list at bay, Lex points out. Banks that are dazedly awaiting an estimated salary of $ 400 million will likely see that amount deflate.

Bar chart of IPO and secondary listings, year-to-date (in billions of dollars), showing Ant Group listing on the verge of generating windfall for Greater China stock exchanges

It was also a wake-up call for Alibaba investors, who saw the group’s shares drop sharply Wednesday before recover some of those losses Thursday.

The eagerly awaited double listing was designed to illustrate the dynamism of the Chinese financial system, whatever the situation. political conflicts taking place in the region. His suspension can change all that.

H2O Asset Management: adrift

Regular readers of DD will have closely followed the saga of the ironic name H2O asset management and its troublesome illiquid investments.

It’s been almost 18 months since Rob Smith of DD and Cynthia O’Murchu of the FT Investigation Team first revealed a surprising fact: that H2O, one of Europe’s most successful fund managers, had loaded more than € 1bn of hard-to-sell bonds linked to Lars windhorst, a controversial German financial.

Editing by Lars Windhorst © FT; Bloomberg

The parent company of the 20 billion euro investment group, the French bank Natixis, initially rejected the story. The head of the lender’s funds management Jean Raby reassured investors shortly after the FT’s presentation that these bonds were in fact “quite diversified”.

And while the Paris-based bank has launched an audit of its lucrative fund management subsidiary, Natixis has repeatedly refused to disclose the results.

“It’s not something that we make public,” Raby told a reporter on the slopes of Davos in January. “It’s something that is really for internal purposes.”

But since that interview, H2O has suffered a murderous year of drastic losses And one unprecedented intervention French regulators on its illiquid assets.

And now, it seems that this is enough for Natixis: the French bank is now seeking to sever all ties with its controversial subsidiary by discharging its majority stake. Get the whole story here.

Work moves

  • Finsbury hired Ginny Wilmerding as a partner in its Hong Kong office. She joins from Brunswick, where she was a partner and led the TMT business in Asia, advising on transactions for clients such as Alibaba and Ant Group.

  • black stone named Eric Duchon to the newly created position of Global Head of Real Estate ESG. He was previously Global Head of Sustainability at LaSalle Investment Management.

Smart readings

Popping pills Hims amassed a $ 1.6 billion empire by delivering Viagra, Rogaine and other remedies in stylish, colorful packaging that kept consumers from blushing at the drugstore counter. But the telemedicine startup can be a little too generous when dispensing prescriptions, potentially overstepping legal limits in the process. (Bloomberg)

Attention the buyer The risky US secured loan bond market has long been supported by the Norinchukin Bank, a Japanese institution that invests overseas on behalf of the yielding country’s farmers and fishermen. The pandemic has infected this route, exposing vulnerable investors to staggering losses from U.S. companies at the height of the crisis. (the Wall Street newspaper)

It’s a landslide As the United States languishes in uncertainty throughout a multi-day election, Silicon Valley leaders have already uncorked the champagne of victory. The pandemic has concentrated almost all industries in the hands of big tech – the real recipients of power in 2020.FT)

News overview

UK insurer RSA in talks to acquire £ 7.1bn (FT)

Justice Department Sues to Block $ 5.3 Billion Visa Plaid Buyout (FT)

Intesa Sanpaolo chief calls for cross-border EU banking deals (FT)

Over £ 1.1bn in fraud revealed in UK rebound loan scheme (FT)

Justice Department files antitrust lawsuit challenging Visa’s acquisition of Plaid (WSJ)

Saudi media group to perform for elite global sporting events (FT)

TikTok’s parent company ByteDance looks to raise cash for $ 180 billion valuation (BBG)

Commerzbank warns of impact of exhaustion of government support for Covid (FT)

SocGen returns to earnings as equity trades rebound (FT)

Iberdrola commits to 75 billion euros to capitalize on the energy transition (FT)

Sainsbury’s will close most Argos stores (FT + The ex)

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