Generali aims high with its multi-boutique model
Even with structurally shrinking margins, asset management can be highly profitable. When presenting its 2021 strategic plan on Wednesday 18 November, Generali confirmed its ambitions in this business. It wants to continue developing its multi-boutique model. Its CEO, Philippe Donnet, said it was aiming to become “one of the world’s five most profitable multi-boutique asset management platforms”.
This ambition of expanding in asset management is nothing new. It was already mentioned in the group’s last strategic plan, in 2018. However, during the pandemic, revenues in this division have actively supported the group. As of 30 September 2020, they were up by 38% year-on-year. The share of revenues from external clients rose by 32% during the period. Generali’s asset management revenues are expected to rise from €482m in 2016 to more than €910m this year. Earnings in this business have tracked revenues upward, from €115m to more than €350m.
To meet its own needs and those of its external clients, Generali is counting on its internal management but also on boutiques, in which it has acquired a majority stake in recent years or that it has itself created. These include Sycomore and Lumyna, which it acquired, and Generali Global Infrastructure, Aperture investors, Plenisfer Investment, and Axis Retail Partners, which it created with external teams. Of the €640.3bn that the group had under management as of 30 September, external managers accounted for €160.6bn, including €70bn managed by Banca Generali, the takeover of which had once been under review by Mediobanca.
Generali is persisting in its multi-boutique strategy, although this model has at times come into question, particularly after the trouble encountered by H2O, the Natixis boutique. The bank ultimately decided to split with its partner. Meanwhile, Generali specified that it integrated its boutiques’ strategic functions, such as governance, risk control and finances as soon as it took them under its wing. Nowadays, you can’t be too careful.