Nykredit has agreed to aquire 75% of shares in Danish peer Sparinvest, which would create a business with some DKK300bn (€40bn) of assets under management, making it Denmark's third largest asset manager.
Nykredit will pay DKK2.245bn for the stake. Those selling will receive a DKK155m dividend for 2018. The deal is subject to ongoing due dilligence being completed and approval from relevant authorities. It also requires approval by a General Meeting of Sparinvest Holdings SE. If completed, Sparinvest would become a subsidiary of Nykredit Group.
Nykredit's assets under management totalled DKK211bn at the end of 2018. Sparinvest's AUM was DKK83bn. Some DKK13.5bn of the Sparinvest assets are managed through Sparindex, Denmark's largest provider of index linked investments.
Nykredit has more than doubled its assets under management since 2013, totalling DKK 211 billion at end-2018. During the same period, Sparinvest has grown its assets under management by 24% to some DKK 83 billion.
Combined the entity would be able to offer investment competencies across a range of asset classes, including equity, fundamentally managed value and growth, quantitative and index strategies.
Some 90% of Sparinvest is owned by 49 banks currently. The other owners are seven Danish insurance and pension companies. The banks will hold 25% of the business in future according if the deal is approved.
Under the new structure, Nykredit customers would gain access to Sparinvest products. The banks, insurers and pension providers that currently distribute Sparinvest products, and which continue as shareholders of Sparinvest, will still be able to offer Sparinvest products in future, but they would also be able to offer Nykredit investment products to their customers.
Synergies envisaged by the deal include lower costs and "stronger focus on the development of skills, concepts and products", although 2019 costs are expected to rise as a result of implementing the deal.
Nykredit has been purusing a strategy it calls "Winning the Double", together with Totalkredit and its partner banks with a focus on mortgage loans across Denmark.
However, Totalkredit and its partner banks have in recent years been developing their partnership; in 2015 they agreed to offer secured loans to homeowners, and in 2016 they set up a project to offer mortgage loans to business customers, and in 2018 launched a unit dedicated to providing property valuations.
Meantime, collaboration between Nykredit and Totalkredit partner banks has groan to include other areas such as pension and life insurance, and with plans to extent the partnership to cover asset management.
Nykredit Group also offers wealth management and other services via Nykredit Bank. The deal to acquire Sparinvest is said to strengthen the pursuit of the Winning the Double strategy.
Michael Rasmussen, Nykredit Group chief executive, said: "Strengthening and expanding the alliance with the partner banks of Totalkredit is a strategic priority. Today we collaborate to provide the best housing loans to homeowners across the country. It is only natural that we are now initiating a partnership with the interested banks to offer top investment products, as many homeowners have savings other than their home equity."
"The asset volumes managed by both Sparinvest and Nykredit on behalf of customers have grown in recent years. By joining forces, we can support this development and provide enhanced customer experiences at both Sparinvest and Nykredit."
Klaus Skjødt, chairman of the Board of Directors of Sparinvest and CEO of Sparekassen Kronjylland, said: "Since the beginning, Sparinvest has been based on a strong collaboration between a group of banks to provide attractive investment products to customers. We are now expanding this collaboration to include Nykredit as a resourceful business partner. Building on Nykredit's expertise, we will be able to offer customers more and even better products than today."
Jørgen Søgaard-Andersen, CEO of Sparinvest (pictured), said: "Sparinvest manages assets on behalf of the many Danes being customers of the banks behind Sparinvest as well as a number of domestic and foreign institutional clients. For both segments, we have high ambitions, and we now look forward to realising them together with Nykredit. Joining our strengths will improve our capacity even further to meet future needs and requirements from customers - also in the long run."