The investment arm of German insurance giant Allianz – Allianz Global Investors – said it was in exclusive talks to buy UOB Asset Management for $467mn or an estimated $600mn. If it goes through, it would be among the biggest asset management takeovers South-east Asia would have seen recently.
UOBAM, which happens to be a unit of United Overseas Bank from Singapore, has more than S$41 billion, or $33.6 billion, of assets under management.
Notably, AllianzGI already manages $692 billion worldwide, and thus the step to buy UOB Asset Management for $467mn would give it a substantial foothold in a region that most of the Western asset managers have sought out avidly for years.
What did AllianzGI do to win the race?
AllianzGI is understood to have outperformed some heavyweight competitors so as to reach the exclusive negotiation phase. Among them were the private equity titan KKR, Amundi – the European asset manager – and Seviora, the sovereign wealth-adjacent investment platform from Singapore.
The price mark is $467 million, or approximately 1.38% of the total assets under management of UOBAM for a firm handling $33.6 billion. AllianzGI and UOB have not separately confirmed particulars of the transaction, and the discussions continue to be private.
Why South-east Asia Now?
The deal is not only about adding $33.6 billion to the balance sheet for AllianzGI. It is more about getting distribution networks, local understanding and current client relationships that would normally take years to develop naturally. The emphasis of UOBAM on fixed income and equities provides AllianzGI with a diverse product portfolio that is well-suited to regional investor preferences.
When it comes to UOB, the sale of its asset management unit might liberate funds for its core banking business while offering clients from UOBAM with the benefits of broader assets and the global network of AllianzGI.
Implications for investors
The fact is that a change of ownership could deliver real benefits for the existing clients of UOBAM. The $692 billion platform of AllianzGI could unlock asset classes and strategies which a regional player merely could not offer at a large scale.
Investors observing this space ought to monitor if the deal truly gets done and at exactly what final price. Exclusive negotiations look promising; however, they are not binding. If AllianzGI and UOB can agree to the terms, the deal could establish a benchmark for how asset management businesses in South-east Asia are evaluated going forward in the future.