Eurizon gears up for Europe expansion
Eurizon Capital, the asset management unit of Intesa Sanpaolo, is expecting to open new offices in Frankfurt and Paris next year.
Having added two staff in France and one in Germany, Eurizon is looking to get its local branches operational in 2017 as it focuses on expansion across continental Europe. The asset manager is targeting institutional clients across the region, including those in charge of funds of funds and private banking.
The aim of the expansion is to enlarge the asset manager’s client base and boost its AUM, which exceeded €276bn at the end of June.
“At the moment we are expanding in Continental Europe and we consider Germany, France, Spain and Switzerland some of the key countries for our development strategies abroad,” says Gabriele Miodini, head of Sales & Client Management at Eurizon Capital SA.
“Having those countries as a focus, we decided to start opening those branches in Paris and Frankfurt, to serve existing clients and meet demand from important local clients,” he adds.
In Germany, Eurizon is aiming at major fund platforms or fund buyers, as well as global banks. However, as Miodini notes, the main challenge here is that the German market is dominated by a few large players, so differentiation from competitors is crucial.
In contrast, in France Eurizon is more focused on local boutique clients and a bit more on the institutional segment. “The French market is also dominated by big local players: the liquidity market is made up by French players and it is a quite closed market. It is a tough, a very efficient market and very difficult to enter,” Miodini acknowledges.
In both Germany and France, Eurizon is focusing its efforts on what may be described as non-core products; bond funds that seek positive returns in the low-yield market environment, and which are decorrelated to other asset classes. Eurizon is also keen to showcase its expertise in a “unique” flexible equity product, which aims to lower exposure to volatility.
“We are focusing on a small number of outstanding products in those markets. We are not starting from scratch: we already have important clients [in Germany and France], but the idea is to create a sizeable distribution platform in Europe, one of the key continents for our international growth,” he says.
In Italy, where demand for funds is driven by the retail market and such local investors are typically conservative in their approach, Eurizon is developing multi-asset solutions that include periodical income distribution and pay particular attention to managing drawdown risk, together with new products that use protection strategies.
According to Miodini, there is a pipeline of new products launching in coming months.
FROM ITALY TO THE WORLD
Eurizon was established in 2008 from the merger of the Italian asset management units of Sanpaolo IMI and Banca Intesa, but its roots can be traced back to 1984 when asset management was established in Italy.
“Thanks to a strong growth pace we have been among the leading players that revitalised the industry of asset management in Italy over the last years,” says Massimo Mazzini (pictured), head of Marketing and Business Development at Eurizon Capital SGR.
At the end of June, Eurizon registered net inflows of €8.5bn and achieved a 3.5% growth year to date, as it grew 16% in 2015 and 24% in 2014.
According to data from industry body Assogestioni, it is the first asset manager in terms of inflows in Italy, and it is among the leading players in Europe.
At a global level, including the Chinese business coming from the partnership with Penghua, the total AUM exceeds €350bn, of which 79% comes from European markets and 21% is allocated out of Europe.
The retail market is currently one of Eurizon’s main focus in Italy but it might become a target in the next stage of the asset manager’s international development, Miodini says.
In Italy, where funds’ demand is driven by the retail market and local retail investors are typically conservative oriented, Eurizon is developing muti-asset solutions that include periodical income distribution and a particular attention to manage drawdown risk, together with new products that use protection strategies.
“Beyond Italian boundaries we are focused on wholesale and Institutional investors, trying to enhance the level of penetration through fixed income products and above all with solutions including an increasing exposure to credit spread, such as EEF Bond High Yield and EF Emerging Bond Total Return,” Mazzini says.
“In addition to these products, we are developing our offer with flexible solutions on global asset classes and we are offering an equity flexible fund investing in the European and US equity markets with the aim of obtaining returns typical of those markets, but with lower volatility, on a 7-year time horizon,” he adds.
Eurizon is also developing alternative products to institutional clients in Italy and abroad – such as the Luxembourg securitized bond fund, which approaches the structured credit market currently being strengthened and promoted by the coordinated action of the European Commission (through the Capital Markets Union) and the European Central Bank (ECB).
“By supporting corporate funding, this new instrument fosters the growth of the real economy and also represents an interesting alternative to traditional asset classes with regard to portfolio diversification,” Mazzini adds.
Eurizon is already present in Luxembourg and Eastern Europe (Slovakia, Hungary and Croatia). Since last July, the asset manager has a joint-venture in London, Eurizon SLJ Capital, a firm providing investment and advisory services with a particular focus on currency management and macroeconomic research.
Taking advantage of the London-based team expertise, Eurizon launched last summer a multi-strategy fund, EasyFund SLJ Global FX, available for retail and institutional investors, which identifies investment opportunities through a currency portfolio, based on top-down analyses of global markets.
“We are tailoring different strategies to specific regional needs. For example, we are collaborating closely with our partner Penghua to satisfy the increasing Chinese interest in investing on foreign markets; in Eastern Europe, instead, we are more focused on retail investors who are looking for fixed income products delivering satisfying returns in a low rate environment,” Mazzini says.
According to Miodini, a pipeline of new products is going to be launched in the coming months.
Eurizon’s “solid” experience in Italy is being used to grow internationally, Miodini says. “We are on the right path,” he adds.
The asset manager has a common strategy that is then executed differently in each country.
This strategy put a focus on the fields in which the firm has an edge, so it concentrates on a few funds and on a few clients, identifying the right client base for particular funds.
As non-italian assets are rising, the international business development activities will keep growing, Miodini says.
“We are aiming to develop our presence abroad choosing different kinds of establishment according to specific geographical regions. While in London we are looking for new investment expertise, such as Stephen Li Jen and Fatih Yilmaz, to enhance the company’s skills with talented people, in other countries we focused on finding commercial skills to create branches to assist local investors as best as possible,” Mazzini adds.