Buyer rumours on Dexia funds business with €18bn SRI arm

UK private equity firm, CVC Capital partners, has reportedly been in informal contact regarding a bid for Dexia Asset Management, according to De Tijd, the Belgian newspaper. The fund management arm of Dexia, the troubled Belgian/French bank, contains one of the largest RI divisions in Europe with 11 dedicated analysts and some €18bn of socially responsible investing (SRI) funds under management, more than a fifth of its €86.4bn funds business. As a result, its asset management arm is likely to generate interest from fund managers looking to build on their SRI presence, if, as expected, it is sold. Dexia’s board has suggested the bank sell the funds division to finance its portfolio of “souring” sovereign and sub-sovereign debt. The board is due to meet in Paris tomorrow (October 8) to vote on a break-up plan for the bank, whose shares were suspended yesterday at €0.845 after they halved in value in the space of a week. CVC could not be reached for comment on the reported
buyout talks, but it is believed that they started before the current market turmoil.It is understood, however, that any sale of Dexia Asset Management could be complicated by the fact that the fund business is a joint venture between Dexia Bank Belgium and Dexia BIL, its Luxembourg commercial and private banking subsidiary. The former looks like it could be taken into state control by the Belgian government, while the latter is holding talks with what it says is a “well-known international investor” with the support of the Luxembourg State which will take a minority holding in the bank’s capital. For its part, Dexia Asset Management has sought to reassure clients. Chief Executive Naim Abou-Jaoudé, said in a statement that it was “business as usual” at the manager. In recent years, Dexia’s SRI division had been through difficulties in client retention following a run of poor performance. In 2009 the French pensions reserve fund (FRR) terminated Dexia from a European SRI equities mandate estimated at more than €100m due to lacklustre returns.