BNP Paribas may acquire ILS fund manager, as it seeks to buy AXA Investment Managers

BNP Paribas, the European and international banking giant, is in exclusive negotiations with insurance and reinsurance group AXA to acquire 100% of its AXA Investment Managers division, a deal that if completed will also see a long-term partnership to manage a large part of AXA’s assets.

This is relevant to the insurance-linked securities (ILS) marketplace as AXA Investment Managers Paris is a long-standing operator of a range of ILS fund strategies.

Under its insurance-linked securities (ILS) fund operations, AXA Investment Managers had $851 million in ILS assets under management as of March 31st 2024.

As we explain in our Insurance-Linked Securities Investment Managers & Funds Directory, AXA Investment Managers ILS fund management team sits within the wider AXA IM Alts Alternative Credit platform and invests in the full spectrum of ILS globally.

The investment manager’s UCITS catastrophe bond fund strategy, the AXA IM WAVe – Cat Bonds Fund, counted almost $225 million in assets under management by the middle of this year.

In addition, the AXA Investment Managers ILS team offers two other insurance-linked fund strategies targeting different risk and return levels for its investors.

AXA said it has taken the “strategic decision” to explore the sale of the AXA Investment Managers (AXA IM) business.

Thomas Buberl, Chief Executive Officer of AXA, explained, “We have also taken a strategic decision to exit asset management with the intention to sell AXA IM to BNP Paribas. We intend to offset the resulting earnings dilution with a share buy-back, and we are affirming the key financial targets of our new strategic plan. We further intend to enter into a long-term investment management agreement with BNP Paribas that would provide a wider range of investment solutions to AXA and its customers.”

For AXA, the same is seen as another step towards simplifying its business model, while focusing on its core insurance and reinsurance activities.

While still being able to access the best-in-class alternatives asset management platform through a partnership agreement.

Buberl added, “AXA Investment Managers has been a homegrown success story for the AXA Group. Over the past 25 years, we have built an exceptional franchise anchored in investment expertise, a relentless client focus and a proven track record on sustainability and private assets. Thanks to the quality of its teams, AXA IM is today a leading player, notably in Alternatives. In the context of a rapidly consolidating and highly competitive asset management industry, the Group has considered different options to support the future development of AXA IM and to best align with the strategic goals of AXA to further simplify its business profile and grow its insurance businesses.”

BNP Paribas said that, “With the combined contribution of BNP Paribas’ asset management platforms, the newly formed business, which total assets under management would amount to €1,500bn, would become a leading European player in the sector.

“Specifically, it would become the European leading player in the management of long-term savings assets for insurers as well as pension funds, with €850bn of assets, leveraging powerful platforms of public and private assets. The acquisition would also allow the combined businesses to benefit from AXA IM Alternatives’ leading market position and track record in private assets which will drive further growth with both institutional and retail investors.”

The company also said that an agreed price for the acquisition and the set-up of the partnership with AXA is of €5.1 billion at closing, which is expected around mid-2025.

“This project would position BNP Paribas as a leading European player in long-term asset management. Benefiting from a critical size in public and alternative assets, BNP Paribas would serve its customer base of insurers, pension funds, banking networks and distributors more efficiently. The strategic partnership entered into with AXA, the cornerstone of this project, confirms the ability of both our groups to join forces. This major project, which would drive our growth over the long-term, would represent a powerful engine of growth for our Group,” explained Jean-Laurent Bonnafé, Director and CEO, BNP Paribas.

With this acquisition, BNP Paribas would take on the AXA IM insurance-linked securities (ILS) investment operation it seems, being a core component of the alternatives segment of the asset manager.

With that the case, if the acquisition closes and the AXA IM ILS team moves across, as the announcements imply would be the case, it could be that we see a rebranding and for the first time BNP Paribas become a name in the catastrophe bond fund management and broader ILS investments marketplace.

It’s also worth noting that the one area of the ILS market where BNP Paribas is already active is within its corporate investment banking division, where the company provides an OTC trading desk service for catastrophe bonds and also publishes a cat bond secondary marks pricing sheet.

So, BNP Paribas is no stranger to ILS, but we believe this could be the first time in its history that it has a dedicated ILS investment management offering.