J. Safra Sarasin loses $1bn in assets due to La Française/Inflection Point venture

French fund manager dismantles Sarasin partnership in RI strategy shift.

J. Safra Sarasin Group, the Swiss asset manager, has been dealt a further blow to its troubled sustainable investment business after French investment house, La Française Asset Management, told Responsible Investor it was pulling out of a joint venture covering sustainability assets of about $1bn. In 2013, Sarasin, the Swiss leader in sustainable investments with CHF14.5bn (€11.7bn) in assets under management, suffered a mass defection of more than 50 sales and fund specialists to rival firm, Notenstein. The latest damaging asset outflow comes at the expense of another RI rival, Inflection Point Capital Management (IPCM), which picked up the advisory assets that had previously been run by J.Safra Sarasin when it signed a partnership deal late last year with La Française AM, the €28.3bn Paris-based funds house. IPCM, the sustainable fund manager started by Matthew Kiernan in 2009, signed the joint venture in December to start advising on $1bn in assets on behalf of La Française in exchange for a half share in IPCM. Under the deal, La Française took a 49% stake in IPCM UK, now the main London-based subsidiary of the sustainability manager, while IPCM took a 49% cross stake in a newly created Paris-based entity called La Française Inflection Point (LFIP). The assets comprise retail and institutional money from La Française. At the time of the deal the provenance of the assets was not public. Responsible Investor can reveal that the $1bn in La Française assets being transferred to LFIP was previously run via a joint venture with J.Safra Sarasin known as LFP Sarasin, which was started in late 2008.In an interview with RI, Xavier Lépine, Chairman at La Française, the parent of La Française Asset Management, said that when the French manager started the venture with Sarasin it didn’t think it would adjust its focus significantly towards the international market. The agreement with Sarasin limited La Française to sales in France: “Today we’re looking to sell as much outside as inside France,” Lépine said. Another issue, he said, had been that taking primary ESG material from a third party meant the French manager had little influence on the process: “It’s a pure filter, you don’t see anything up front. Since the change of control at Sarasin to Safra we felt we had even less input.” Lépine said the contract with Sarasin included a contractual review period which La Française was invoking to dismantle the partnership and transfer the assets to LFIP. IPCM in London will carry out the ESG research based on its Strategically Aware Investing strategy, while the assets are managed from Paris by LFIP. La Française, which is majority-owned by Crédit Mutuel Nord Europe, the French co-operative banking group, is a signatory to the UN-supported PRI, and posits ESG integration as a major pillar in its equity investment strategy. The latest deal is the third it has done with an external ESG-themed manager. In November 2012, La Française took a 20% stake and placed €15m in assets in Cedrus Asset Management, the Paris-based SRI fund-of-funds house. The group also has a stake in Paris-based Mandarine Gestion.

Link to RI interview with Xavier Lépine.