OFI AM, La Française discuss merger of incubator businesses

OFI Asset management and La Francaise are discussing a merger of their respective asset management incubation businesses in a move which will create one of the largest entities in the region.

A joint statement said OFI AM unit NewAlpha AM and NExT AM, a subsidiary of Groupe La Française, were focused on leveraging durable complementary business models for future growth, particularly in international markets.

A merger would create a leading European incubator with 31 active partnerships, of which 13 are international. Some €7.2bn in assets is currently managed by the incubating companies;

The statement said both firms shared “a deep understanding of ‘fee sharing’ techniques, and genuine expertise in venture/growth capital as applied to the fund management industry”. It would involve a team of 20 people, with proven experience in the selection, analysis and management of stake holdings.

A third-party incubation specialist, NewAlpha AM’s main focus is the hedge fund sector. Over the past seven years, it has established international expertise in sourcing, analysing, selecting and developing the business of young talented fund managers.

NewAlpha AM now ranks among the top five business incubators in the field of alternative fund management, the statement said. It has more than $800m invested in 20 managers around the world, including in the “highly mature and competitive” markets of the US and the UK.

The 12 fund managers that are currently part of NewAlpha AM’s incubation programme manage assets worth over $3.2bn, after having received $420m in seed money between end 2008 and early 2013.

Early 2012, NewAlpha AM was selected to manage the Absolute Return sub-fund of the EMERGENCE SICAV, dedicated to incubation and to supporting the best newcomers in the French fund management industry.

With stakes of $150m provided by nine of the largest institutional investors, the fund has received much interest from the French and international investment community.

With 10 years’ experience, NExT AM, a subsidiary of Groupe La Francaise, is known for its long-only investment partnerships. The firm has a portfolio of 20 holdings in fund management and investment advisory firms.

Its record includes support for firms such as Métropole Gestion, Mandarine Gestion, JKC and Acropole. It has developed recognised expertise in identifying attractive candidates, structuring the stake holdings and working alongside the incubating companies, both from a logistical and a business perspective.

Over the past 10 years, NExT AM has taken part in the launch of many companies. At the end of 2012, NExT AM’s portfolio includes 17 stakes holdings, of which 12 are fund management firms, four are investment advisory firms and one is distribution company active on the French and international markets.

Total assets under management or advisory agreements total €4bn, spread over 47 mutual funds.

Over the last 40 years, the OFI Group has evolved two investment structures: a mutual fund arm, for all fund management activities, and a discretionary management arm, which encompasses institutional segregated mandates.

Owned by two large institutional groups, Macif and Matmut, the OFI Group employs close to 260 people and managed €54.5bn at end February 2013.

Groupe La Française has developed its expertise managing securities, real estate assets and global investment solutions for over 35 years. In the last decade, it has also taken on significant minority holdings, becoming a major player in this segment.

With over €37bn under management, the firm operates independently and enjoys a unique and strong ownership structure, including reference shareholder Crédit Mutuel Nord Europe as well as the company’s executives and employees.

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