Generali eyes Sycomore acquisition in bid to bolster ESG offering

Insurance heavyweight in talks over majority stake in French sustainability house

Generali has announced it is in exclusive talks to “acquire a majority stake” in France’s Sycomore Asset Management, as the Italian insurance giant seeks to boost its ESG offering.
Generali has now confirmed recent market rumours that a deal is on the cards, announcing that it was seeking to create a “strategic partnership” with the €8.3bn Paris-based boutique known for its environmental and socially-responsible funds. 
It stated the proposed deal “underscores” Generali’s commitment to ESG and marks “a new milestone” in its “multi-boutique strategy”, which it announced last year.
Following the deal, Sycomore would be added to Generali’s “multi-boutique platform”, but its investment team would continue to run the firm’s strategy and operations independently, the statement said.
The deal would also see Sycomore’s founders remain significant shareholders in the company.
Laurent Deltour, who co-founded Sycomore in 2001, stepped down from his role as CEO in April. Current CEO and co-founder Emeric Préaubert expressed his “delight” at the proposed partnership, pointing to the growth in investor awareness and appetite for SRI.
In addition to regulatory approval, any deal would also need to be approved by Sycomore’s workers’ council.Timothy Ryan, Generali’s Chief Investment Officer, said that the potential deal would enable it to “strengthen our focus and capabilities on sustainability and responsible investments.”
Generali’s commitment to ESG was questioned earlier in the year by shareholders at its AGM (19 April 2018), with a focus on its insurance of coal projects in Poland and Czech Republic.
In February, Generali announced it would divest €2bn from coal as an asset owner, and maintain “a minimum level of exposure in the coal sector” regarding underwriting activities, as part of its Climate Change Strategy. 
But shareholder campaigners challenged Generali’s caveat that it could continue to invest in “countries where the production of electrical and heating energies is still dependent on coal, without alternatives in the medium term”, such as Poland and Czech Republic – two of Europe’s biggest coal consumers. Generali described its approach to RI at the time as “pragmatic” and “realistic”.
Italian insurance supervisor IVASS passed regulation over the summer forcing insurance companies in the country to consider environmental and social issues in all their activities.