Aviva’s French asset management arm is eyeing a larger piece of the European fund management pie, having completed a recruitment drive to strengthen key areas of the firm.
Aviva Investors France manages some €107 billion ($122 billion) of assets, according to its CEO, with the majority of these funds managed on behalf of its parent insurance group. Around 5 percent of the total is for external client assets, but chief executive Inès de Dinechin has lofty ambitions to double this number by 2020.
In preparation for the assault on the French market, de Dinechin authorized a hiring push to bolster its illiquid portfolio management team, portfolio solutions group, and client support staff.In France, the majority of invested assets are managed in insurance contracts, and de Dinechin is hoping to win business from the companies managing these contracts.
The opportunity stems from the new Solvency II and International Financial Reporting Standard regulations, according to the former Lyxor Asset Management chief executive. These new rules have pushed insurance firms to seek out capital-efficient investment strategies because investing in traditionally riskier assets, which offer a higher return, will now require insurers to hold more cash on their balance sheets in case the assets go bad.With a host of potential new customers shopping around, de Dinechin believes that her newly recruited talent will be the key to getting clients to sign on the dotted line.
“We are developing our Solvency II solutions and working with the new IFRS 2021 accounting rules,” she said in an interview. “We have insurance specialists, quants, financial engineers. For quite a while we were dedicated to our internal clients, but we have good expertise and we thought, ‘Let’s develop that and offer it to all clients.’”
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To date, the company has already developed its product suite in line with many of its European competitors, focusing on infrastructure debt, real estate debt, private debt, and corporate and private debt.
“French clients have a significant part of their investments in real estate,” de Dinechin noted. “In previous years, they have been very focused on the local market but today they are looking for diversification. The French market is now quite stretched and the yields have decreased in the past few years, so investors have needed to diversify their investment base geographically.”Aviva’s French asset management operation has been the subject of speculation at industry conferences, due to the threat of jobs moving from the group’s London office to Paris as a result of the U.K.’s vote to leave the European Union. However, de Dinechin said that no concrete decision has been made internally as to whether any of the asset management jobs in London will end up in Paris. Any decision will ultimately come from the management team in London, she said.