By Mathieu Rosemain and Sudip Kar-Gupta
PARIS (Reuters) - Amundi, Europe's largest asset manager, said on Tuesday it was making its biggest foray into the United States by selling its U.S. arm to Victory Capital in exchange for a 26% stake in the U.S. company.
Amundi's U.S. arm currently manages $104 billion - less than 5% of the group's 2 trillion euros ($2.1 trillion) in assets - and the deal is aimed at giving the Paris-based manager more access to clients in the world's largest financial market.
The tie-up involves 15-year exclusive distribution deals that will enable Amundi to sell its non-U.S. fund products to U.S. clients via Victory, while the latter will be able to sell to more clients in the United States and use Amundi's distribution networks to access customers in Europe and Asia.
"It's the biggest deal we've ever done in the United States," Amundi CEO Valerie Baudson told reporters on a call.
The 26% stake would make the French asset manager Victory's biggest shareholder, ahead of the U.S. company's employees, which own about 20%. The deal does not involve a cash payment.
Victory manages $175 billion in total client assets and has a market value of about $2.7 billion.
Shares in Amundi were down 1.7% at 0744 GMT, outperforming sharper falls across European markets on Tuesday.
"We believe this partnership reinforces Amundi’s position in the US, as well as its leadership position among the biggest global asset managers," JP Morgan analysts said in a research note.
Amundi said in a presentation to investors the group and Victory had identified around $100 million in annual cost savings before tax within two years of completing the deal.
The combined entity would generate annual revenues of about $1.2 billion and adjusted net income of about $400 million before synergies, Amundi said.
The JP Morgan analysts estimate the deal would boost Amundi earnings per share by about 5% by 2026.
"The proposed transaction with Victory Capital is a unique opportunity to strengthen our presence in the U.S., while becoming a strategic shareholder in a reputable U.S.-based asset management firm with an excellent track record of growth," Amundi's Baudson said in a statement.
Amundi will have representatives on the board of Victory, which traces its history back to 1894 and is based in San Antonio, Texas.
About half of the combined Amundi-Victory assets would be in equities, followed by 25% in fixed income and 25% in multi-asset, the JP Morgan analysts said.
($1 = 0.9421 euros)
(Reporting by Sudip Kar-Gupta and Mathieu Rosemain; Additional reporting by Augustin Turpin; Editing by Louise Heavens and Mark Potter)
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