Legal & General Investment Management (LGIM) has agreed to buy ETF Securities’ European ETF platform known as Canvas, which includes an Irish-based UCITS fund and a UK-based investment manager with $2.7bn spread across 17 products. The news comes two days after WisdomTree announced a deal to buy ETF Securities’ European ETP business.
Graham Tuckwell, founder and chairman of ETF Securities.
Graham Tuckwell, founder and chairman of ETF Securities, commented: “We have built the Canvas business from scratch to be Europe’s largest independent ETF provider and it is now of a size and quality that can be taken to the next level of growth by a large and highly respected firm such as LGIM. Combining the ETF expertise and capabilities of Canvas with the scale and reach of LGIM should be transformative for existing and new customers.”
The acquisition clears the way for LGIM to start launching their own ETFs on a ready-made UCITS platform and signals a loud endorsement of the current strength of the ETF industry from the UK’s largest asset manager.
Industry watchers will be keeping a keen eye on LGIM and waiting for the firm’s first independent move in the ETF space with anticipation.
Previously LGIM had partnered with Source, now part of Invesco PowerShares, on a commodity ETF and to manage its physical ETFs, an arrangement to be superseded by PowerShares building out its own portfolio management team.
It is understood that the deal will mean LGIM takes control of the current line up of ETF Securities UCITS ETFs, which covers equities, fixed income and commodities, including the $904 million Robo Global Robotics and Automation GO UCITS ETF (ROBO LN), the $326m ETFS ICE Cyber Security UCITS ETF (USPY LN) and the LOIM suite.
Mark Weeks, UK CEO of ETF Securities, said: “This transaction reflects growing appetite for innovative content ETFs across the industry and is the result of extensive discussions with LGIM on how we can best work together to deliver new and exciting products to our customers. We strongly believe that ownership by LGIM is in the best long-term interests of our ETF investors and we intend to deliver a seamless handover of the business.”
Mark Zinkula, CEO of LGIM, added: “As a leader in product innovation, we are constantly exploring ways to deliver new investment solutions for our clients. The ETF market is one of the fastest growing segments in asset management. A number of long-term macro trends, including the increasing use of passive vehicles and the drive to digitalisation, will lead to a growing demand for ETF products. We are well positioned to leverage the scale of our $431bn index business to develop ETF solutions that complement our existing range of index funds.”
“This is a natural step in our strategy to develop products for a wider audience. The acquisition of Canvas enables us to cater to a growing base of clients across Europe and further grow our market share in both retail and institutional markets. LGIM shares a strong cultural alignment with Canvas and we look forward to working with the team going forward.”
Earlier this week, WidsomTree announced it had agreed to buy ETF Securities’ ETP business, comprising 307 exchange-traded products with commodity, currency and short and leveraged exposures, in a deal reported to be worth $611m (see WisdomTree to acquire ETF Securities’ European ETP business).
Assuming both deals go through, it will be the final chapter as an independent company for a firm founded by Graham Tuckwell in 2003 with the launch of the world’s first physically backed gold ETC. The firm was also responsible for Europe’s first oil ETC in 2005 and the first carbon ETC listed in London in 2006.
The sale of Canvas to LGIM, for an undisclosed sum, is subject to regulatory approval and is anticipated to close in Q1 2018.