Axa buys Framlington in 174m deal

Axa Investment Managers is to purchase the Framlington Group in a deal worth 174m. Framlington fund managers will join Axa IM and run their current portfolios under the new Axa Framlington brand.

Paul Griffiths, chief executive of Axa IM UK, says: “The purchase gives Axa two key benefits. We are buying a company with significant value providing a source of alpha from highly skilled fund managers. But we have also bought a brand that in particular will boost Axa IM’s UK equity strength.”

Griffiths adds: “We already have retail funds within the business and as part of the due diligence process have been looking at fund mapping in conjunction with our new colleagues. This is still in progress and there may be some restructuring of funds.

“From a tactical point of view the deal fills a gap in our UK equity capabilities. Strategically it will significantly bolster our presence in the UK retail marketplace.”

Axa IM head of UK retail Simon Ellis says: “There are very few funds that could potentially clash with each other. The Framlington investment style is distinctive and the deal is about growing, not gutting the business.”

Ellis (pictured) explains: “It was critical that we added quality in the UK equity space.”

Axa IM was formed in 1994 when Axa Group, a French financial protection and wealth management company, separated its insurance and asset management companies. The company operates in 13 countries, has over 2,100 staff, and had €382bn (264bn) under management at June 30. The UK division of Axa IM was formed in 1997.

Framlington manages over 4.5bn on behalf of investment trusts, pension funds, charities, institutions, private clients and retail investors, including a range of 24 unit trusts.

Nigel Thomas, manager of the 540m Framlington UK Select Opportunities fund, says: “We very much want to grow the business and hopefully it will be a positive move for the future. All our key people are incentivised in the longer term. I will carry on managing the fund on behalf of its unit-holders, of which I am one.”

Mark Dampier, head of research at Hargreaves Lansdown, says: “Axa has paid a lot of money for the company, but Framlington is growing and presumably they have managed to lock in a number of key managers for a number of years.”

He adds: “It seems that they [Axa] will be leaving Framlington alone to carry on running funds and it is effectively a change of ownership that won’t affect the unitholders.

“It is a shame that the Framlington fund managers couldn’t do an MBO [management buyout], as I prefer asset managers to be owning their business.”

Axa IM global head of securities investment management Robert Kyprianou is to take on the role of Axa Framlington CEO. Kyprianou will report to Axa IM CEO Nicolas Moreau.

The deal is expected to complete at the end of September or October. The transaction is being financed internally by the Axa group and is subject to a number of conditions, including regulatory approval. Framlington is currently jointly owned by HSBC Holdings and Comerica.