Societe Generale, the French investment giant behind Lyxor ETF, has agreed to acquire Commerzbank’s equity markets and commodities business. The business includes the German bank’s established ETF brand, ComStage, and its associated ETF market-making platform.
Commerzbank has approximately €9bn in AUM across its range of ComStage ETFs/ETPs, as of the end of May.
“While complementing Lyxor’s ETF franchise, this acquisition would be transformational for our activities in Germany as it would enable Societe Generale to reach a new scale in the leading Eurozone economy”, said Séverin Cabannes, Deputy Chief Executive Officer of Societe Generale.
“I am convinced that with Societe Generale and Lyxor, leading derivatives and ETF houses, we have found the right new owners for this franchise to grow, innovate and be even more successful in the future,” added Roberto Vila, Divisional Board Member Equity Markets & Commodities at Commerzbank.
Independent analyst Hortense Bioy, director of passive strategies and sustainability research for Europe at Morningstar, commented: “Rumours were going around, so Lyxor’s acquisition of ComStage ETFs doesn’t come as a surprise. Through this acquisition, Lyxor aims to consolidate its position as a pan-European ETF provider by reinforcing its presence in Germany, a key ETF market. Being a truly pan-European ETF provider calls for extensive distribution networks and demands a full menu of competitive products listed across several exchanges to satisfy a geographically diverse client base.
“Through this acquisition, Lyxor is closing the gap with Xtrackers. According to Morningstar data, the combined AUM was €74bn at the end of May. This compares to €77bn for Xtrackers. So Lyxor remains number three in the European ETF market, behind iShares and Xtrackers.
“In terms of products, there are a number of overlaps between the Lyxor and ComStage ETF ranges, including funds that track plain-vanilla indices like MSCI World, DAX, S&P 500, and Emerging markets. It’s likely that Lyxor will merge the overlapping Luxembourg-domiciled funds. Lyxor may decide to keep the small range of German-domiciled ComStage ETFs. Unlike with other recent M&A activities in the European ETF market, this acquisition will result in consolidation at two levels: at the provider-level as well as at the product-level.”
The acquisition will add some heavy firepower to the Societe Generale/Lyxor ETF arsenal.
Deborah Fuhr, Managing Partner at ETF industry consultants ETFGI, said: “Societe Generale’s ETFs business will benefit from the acquisition in two areas. One, Commerzbank’s ETF trading business is highly regarded and very active in trading in European and Asian-listed ETFs and ETPs. And, two, as at the end of May 2018, Commerzbank offered 118 ETFs/ETPs with assets of $10.47bn [€9bn].”
Commerzbank’s largest ETF is the €1.4bn Comstage MSCI World TRN UCITS ETF (CBNDDUWI GY) which tracks the MSCI World Index, providing exposure to global equities from both developed and emerging markets.
Other sizeable products reflect the bank’s leading position in the German market, including the €1.0bn Comstage CB Bund-Future Short TR UCITS ETF (5X62 GY), tracking a daily short position in Euro-Bund futures, and the cheapest ETF in Europe to track the DAX Index, the ComStage DAX UCITS ETF (CBDAX GY), which costs just 0.08% and is the third largest ETF in the ComStage suite with €790 million in AUM.
The transaction, subject to approval from tax and regulatory authorities, is expected to be completed by the end of the year.