Azimut’s UniCredit deal to yield profits in the long run

Azimut’s UniCredit deal to yield profits in the long run

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MILAN — Italian asset manager Azimut expects to post a small loss on its business venture with UniCredit this year, but believes it will pay off in the longer term, its chairman said on Wednesday.

“It’d be surprising if it didn’t show a slight loss for 2023 but there are doubtlessly profits ahead,” Chairman Pietro Giuliani told a news conference.

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Azimut said in December it had agreed with UniCredit to set up a new asset management company in Ireland, dubbed Nova Investment Management, tailored to the needs of the Italian bank, which has an option to buy up to 80% of the business after five years.

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Azimut CEO and global head of asset management Giorgio Medda said on Wednesday the lack of disclosure of the financial terms of the deal had led investors to underestimate its potential.

Azimut will start distributing in the second half of 2023 investment products devised for UniCredit clients through the latter’s branch network.

Medda said the products will be priced so as to preserve the 50 basis point net margin Azimut currently reaps on average on its Italian assets under management.

Giuliani defended Azimut’s policy of applying high fees to its investment products saying the company believed in active asset management, despite it being a more costly strategy than a passive approach.

Asked about the expected new money inflows Azimut could reach through the UniCredit partnership, Giuliani said he hoped to get to “a few dozen billion euros” in assets under management in a few years’ time.

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UniCredit’s main asset management partner is currently Amundi and the Italian bank must sell a guaranteed minimum of financial products to meet the obligations under its contract with the French company.

That contract expires in 2027 and UniCredit CEO Andrea Orcel has not ruled out that the bank might not renew the accord.

Azimut on Wednesday said it expected net inflows to slow down to 6-8 billion euros this year after beating its own guidance in 2022 with 8.5 billion euros in net inflows.

It expects a 2023 net income of at least 450 million euros. (Reporting by Valentina Za Editing by Keith Weir)

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