Two Chinese private equity funds are closing in on a deal to buy the asset management arm of Dexia, highlighting the interest of Asian buyers in European financial assets as banks look to restructure in the wake of the financial crisis.
If the sale of the business for about euro 500m is completed, it would mark the last stage of a break-up of the twice-bailed-out Belgo-French bank, one of the biggest European victims of successive financial crises during the past four years.
Hony Capital, one of China’s largest private equity groups, teamed up with GCS Capital, a fund founded by former investment banker Guocang Huan, to buy the business, which has about euro 80bn under management and clients in 25 countries.
The two funds have been selected as Dexia’s preferred bidder, people familiar with the situation said.
One of the people said an agreement in principle was reached in talks in Paris on Wednesday and was set to be signed next week. A second person with knowledge of the talks said the group had offered more than euro 500m for the unit.
The two buyers plan to provide Chinese investors with a deeper understanding of investment opportunities in Europe in the wake of the financial crisis while developing renminbi products for investors sitting in Europe.
Dexia said in June it was in negotiations with three international investors for the sale of Dexia Asset Management, and expected a deal in the coming weeks. It gave no details.
People familiar with the matter said New York Life Insurance and Macquarie Group had been among those interested. These companies declined to comment. The sale of DAM will be the last of six Dexia units hived off in a fire sale of assets over the past nine months, which have so far raised euro 8.7bn.
The selection of a preferred bidder comes after the departure last month of Jean-Luc Dehaene, chair, and Pierre Mariani, chief executive, who were brought in to rescue Dexia in 2008 after its first bailout.
Dexia declined to comment.
Meanwhile, Pierre Moscovici, French finance minister, said Paris was close to a deal with the European Commission on last year’s overall euro 90bn bailout of Dexia by France, Belgium and Luxembourg.
The commission has so far temporarily approved only euro 55bn of the state guarantees.