GCS to buy Dexia's AM arm for $500 million

GCS Capital, a little-known Hong Kong-based private equity firm, has agreed to purchase Dexia Asset Management (DAM) in a €380 million ($496 million) deal which includes a distribution agreement with Industrial and Commercial Bank of China (ICBC).

The share purchase agreement, announced yesterday, includes the full scope of business of Dexia bank’s asset management arm, which has about €80 billion in AUM and 550 staff globally. Reported estimates for the value of DAM have been cited as high as €500 million.

The deal, subject to approval by regulators in Europe, is expected to be completed in the first quarter of 2013. Financial details of the agreement were not disclosed.

ICBC is involved in the deal under a “strategic partnership”, according to a GCS Capital statement. A spokesman for the PE firm declined to comment when asked if ICBC was contributing to the cost of the acquisition.

DAM products will be distributed in Asia through ICBC’s branch network, while Asia-focused products will be offered to DAM’s existing European and Australian investors, says GCS.

GCS is understood to have wider plans beyond the DAM acquisition, with the objective of undertaking further mergers to build a broad platform which would initially be focused on distributing European products to Asian investors. Asian products would also be distributed into Europe to the continent’s large investor base.

GCS states that it is in advanced discussions with other major financial institutions which would further expand DAM’s distribution network in emerging markets.

The deal is the first high-profile transaction by low-key GCS, which was established in 2010 by HSBC veterans Mike Powell, based in London, and Guocang Huan in Hong Kong.

A GCS spokesman says the private equity firm does not publicly disclose its assets under management, nor details of its investment vehicles or limited partners. Guocang Huan was unavailable for an interview.

French-Belgian bank Dexia has been selling off assets since 2011 as part of a years-long winding down process. Proceeds will go towards the repayment of billions in bailout money lent by the French and Belgian governments when the lender fell into difficulties stemming from the European sovereign debt crisis.