The Franco-German connection
Oddo BHF Asset Management is pursuing expansion in Europe and is set to develop its alternative fund range. Its CEO Nicolas Chaput (pictured) explains all to InvestmentEurope.
The relationship of the Franco-German couple is often described as a plinth of the European Union’s unity. It is also a key feature of Paris-headquartered financial group Oddo & Cie, which strengthened this facet of its business by changing its name and logo to Oddo BHF in March.
The rebranding aimed at reflecting Oddo’s new identity as an integrated Franco-German financial services group, following the acquisitions of Meriten Investment Management and BHF Bank in the past two years.
Following the renaming, Oddo Meriten Asset Management has become Oddo BHF Asset Management. The firm managed €43bn of the €100bn in assets under management reported by Oddo BHF as at 31 December 2016.
“55% of Oddo BHF AM clients are located in Germany, 35% in France and the rest on other markets. There is no other such balanced Franco-German asset manager in the industry. Our Franco-German DNA backs the idea that we are eurozone specialists because Germany and France form over half of the eurozone’s GDP growth and more than 60% of the MSCI Euro index,” says Nicolas Chaput, chief executive officer of Oddo BHF AM.
The investment firm has developed itself on the fundamentals of the Oddo group that originally was a French equity broker founded in 1849. The Oddo family and employees own the company.
Oddo BHF AM can trace its asset management expertise back to 1978, starting with European equities and a focus on mid-sized companies matching Oddo’s own DNA.
“The first funds Oddo BHF AM ever launched were focused on French and European equities. Within our “Avenir” fund range, we currently have over €4bn of assets invested in European mid-cap stocks, making us one of the key players in that asset class. The flagship funds are Oddo Avenir (French mid-caps), Oddo Avenir Euro (eurozone mid-caps) and Oddo Avenir Europe (European mid-caps).
“Another characteristic of Oddo BHF AM remains investments in family businesses, which is the core of the Oddo Generation fund launched in 1996. The fund has around €640m in assets under management. Family businesses have another time horizon compared to most listed companies owned by markets and we believe they provide better return on capital over the long term than their listed peers,” Chaput explains.
Until 2010, Oddo BHF AM focused on the French market with a strong client base of CGPIs (French IFAs), banking distribution networks and institutional clients. Its local development was boosted by the purchases of Cyril Finance in 2005 and Orsay Asset Management in 2010.
The firm then started to tackle new markets outside France, as from 2011- 2012 with the opening of a first office in Geneva. Milan and Frankfurt offices followed.
Chaput underlines the strategy has been successful as a switch was observed in Oddo BHF AM’s net inflows between 2012 and 2015.
“French clients historically accounted for 90% of our net inflows, but from the moment we opened offices outside France, foreign clients have represented over 60% of our total net inflows,” he says.
“Germany was rather a challenge for us compared to our successes in Switzerland and Italy. The German market is a closed one and it remains hard to enter if you are not from the country. It was very important for us to get a foothold in Germany as alongside France it forms one of the two largest institutional and saving markets in Continental Europe,” Chaput emphasises.