The deal is expected to close by the end of the year, pending regulatory approval, and involves Amundi taking a 26% ownership stake(and 5% voting rights) in Victory Capital. In exchange, Amundi’s US subsidiary(which operates under the Pioneer brand) will become an affiliate of Victory Capital. Both firms will also enter into 15-year reciprocal distribution agreements. We see no reason for immediate concern here: While some operational synergies are expected, there has been no indication of investment staff layoffs or culling of product lineups on either side. Reassuringly, Victory Capital has a history of being largely hands-off with its affiliates, which should preserve Pioneer’s brand as well as its autonomy in investment decisions, resourcing, and processes. We will continue to monitor the deal as it closes, but for now we are not making any change to Amundi’s Parent Pillar rating of Average.
The recent announcement comes on the heels of several other acquisitions since CEO Valérie Baudson took over in 2021. In 2022, Amundi acquired passive specialist Lyxor Asset Management and has now fully integrated its operations with minimal disruption. Earlier in 2024, the group also acquired Zurich-based Alpha Associates, which specializes in private equity and private debt.
In the meantime, the firm has continued the difficult task of rationalizing its fund range by culling those active strategies it deems insufficiently differentiated. While these efforts should ultimately benefit investors through a clearer fund lineup with higher active risk, it will take some time for them to bear fruit. Incentive structures for portfolio managers and analysts are in line with industry norms but could be improved by giving a larger weighting to long-term returns instead of short- and medium-term numbers. Additionally, while some portfolio managers invest personally in the funds they manage, it's far from being a common practice at the firm. Finally, while its passive products are very competitively priced, we believe Amundi could do more to pass on its large economies of scale in the form of cheaper fees on its active funds.