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BNP Paribas is betting that Europe’s private credit boom has room left to run with the continent’s huge financing needs set to draw retail investors and wealthy clients to the sector.
The French bank outlined goals on Tuesday to increase net inflows to its €1.6tn asset management arm by a cumulative €350bn in the years to 2030, driven in part by its alternative assets business. Alternative assets include private debt, real estate and infrastructure investments.
Investors have in recent weeks rushed to withdraw money from some US private credit funds over concerns about their exposure to software companies and about wider underwriting standards.
Sandro Pierri, who runs BNP Paribas Asset Management, said that while a lot of funds had flowed into such vehicles in the US, Europe was still comparatively small, more shielded by norms protecting investors and that the bank did not see “any fundamental deterioration” in credit quality more widely.
“In Europe regulation is much more fit for purpose” in terms of protecting people from mis-selling, Pierri told the FT. “And we haven’t even started . . . the amount that has gone into this segment [from wealthy individuals] is relatively small compared to the US.”
In contrast, investment needs in technology, energy independence and the environmental transition in Europe were surging, he added. BNP Paribas expects retail investors and wealthy individuals to drive nearly two-thirds of the growth in its alternative assets under management by 2028.
France’s biggest bank absorbed insurer Axa’s investment management arm last year following a €5.1bn acquisition, making it the continent’s third biggest asset manager after Amundi and UBS. More than two-thirds of its assets are in Europe.
It has a 15-year contract with Axa to keep managing its assets but said on Tuesday it would seek to strike more deals with insurers, as well as to build on its fixed-income franchise and exchange traded funds business.
Assets under management would increase by about 5 per cent a year, BNP projected, with revenues from the asset management division increasing by around 4 per cent a year. The bank is in the process of cutting 1,200 jobs — about 20 per cent of headcount — across the unit through voluntary departures as part of the Axa integration process.
Other banks and asset managers in Europe are also looking to grow in private credit despite the jitters around the industry.
Deutsche Bank said last week in its annual report that it wanted to expand its private credit offering, with its asset management arm committed to “expanding private credit offerings through partnerships with [its] corporate bank and investment bank”.
Last year, Deutsche announced a deal with its majority-owned asset manager DWS to co-operate on private credit, and in September launched an evergreen private markets fund with DWS and Swiss private capital firm Partners Group.
Amundi, meanwhile, said last year it was taking a 10 per cent stake in London-based ICG as part of a push into private credit.
