(Bloomberg) -- Amundi SA expects to accumulate about 2 billion euros ($2.1 billion) in excess capital through 2025, which the asset manager intends to use for mergers and acquisitions or to return to shareholders through exceptional payouts.
The company plans to return at least 65% of net income to shareholders over that period, or about 3 billion euros in cumulative dividends, Paris-based Amundi said in a statement Wednesday that outlines its financial objectives. The firm, which previously returned no more than 65% of earnings to shareholders, could sweeten the payouts if it doesn’t find a takeover target.
“There is no cap” on the payout policy, Deputy Chief Executive Officer Nicolas Calcoen said in a call with reporters. “If we don’t have the opportunity to deploy the 2 billion euros of excess capital, we could then consider an exceptional dividend or a very strong increase of the normal dividend, and potentially go much higher than 65%.”
Since its initial public offering in 2015, Amundi has grown through a string of acquisitions to become Europe’s largest asset manager. Deals include the purchase of Pioneer Investments from UniCredit SpA in 2017 and its acquisition of Lyxor from Societe Generale SA last year. The firm has deployed as much as 5 billion euros on M&A, Calcoen said on the call.
Amundi’s shares lost as much as 2.6% in early Paris trading on Wednesday, and are down about a third this year.
Amundi, which has mainly acquired European peers so far and strengthened its presence in Asia via joint ventures, doesn’t have a preferred destination in mind for its future acquisition strategy.
“We will pick up all the potential external growth opportunities on the condition that they fit our strategy,” CEO Valerie Baudson said on the call. Potential targets should also respect Amundi’s expectation of a 10% return on investment in the three years after deal completion, and should not bear any execution risk, Baudson said.
Firm’s Goals
The firm says it wants to strengthen its leadership in Europe, is targeting 500 billion euros in assets under management in Asia over the next three years, and wants to consolidate its investment hub in the US, partially to serve its clients elsewhere in the world.
Amundi kept other financial targets unchanged from its previous strategic plan. The firm is targeting an annual growth rate for adjusted net income of about 5% through 2025, and aims to keep its cost-to-income ratio under 53% over the period after the synergies stemming from the acquisition of Lyxor.
In spite of a challenging environment for asset managers, with slower growth, resurgent inflation and increased geopolitical uncertainty, Baudson said she believes the sector will benefit from long-term trends, such as the growing need for savings solutions to finance the retirement of an aging population and the energy transition.
“In this context and in a market that will remain competitive with margins under pressure, only big and solid players like Amundi will be able to come out victorious from those great transformations,” she said. “I am convinced that Amundi will be one of the great global leaders in its sector.”
(Updtes with shares in fifth paragraph)
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