GCS acquires Dexia Asset Management

The Chinese firm has confirmed its purchase of the coveted €80bn asset manager, and teams up with ICBC, China's biggest bank, to expand DAM’s foothold in emerging markets.

Chinese private equity firms GCS Capital has signed an agreement to acquire Dexia Asset Management from Brussels-based bank Dexia.

The sale comes after both companies entered exclusive talks on 4th December, as Private Equity International reported earlier this month. It seals the end of a bidding process that had reportedly involved a number of large buyout firms, including Advent International, Bain, CVC, Permira, and Warburg Pincus.

Both parties declined to disclose further details, but the deal could reach €500 million, according to a prior Financial Times report.

It represents the final stage of the dismemberment of Dexia, which has proven to be one of Europe’s biggest casualties of the financial crisis. The bank has been bailed out three times, and is now under pressure to pay back the €5.5 billion it owes to the French and Belgium government. It sold its Turkish bank DenizBank to Russia for about €3 billion this summer.

GCS intends to keep Europe at the heart of DAM’s strategy, and has pledged to retain its existing staff and offices, the firm told Private Equity International.

But GCS will also seek to build upon DAM’s existing platform to gain distribution into new markets: in addition to the sale, GCS announced the signature of a strategic partnership with Industrial and Commercial Bank of China, the country’s largest banking group.

The cooperation will allow DAM to tap into ICBC’s expertise in emerging markets and will give it access to the institution’s nationwide branch network, GCS said. ICBC will also assist in extending DAM’s product offering, by taking part into the development of Asia-focused solutions to its existing European and Australian customers.

GSC will establish new regional hubs in Hong-Kong and Doha to support both fronts of expansion, and is in the process of forging further partnerships with overseas institutions to continue broadening its horizon, the firm said.

GCS Capital was founded by two former senior investment bankers from HSBC, Guocang Huan and Mike Powell. Huan sits on the boad of the Qatari Financial Centre, and Powell is a board member to one major Saudi wealth management company and one of Dubai’s leading investment bank, GCS said.

The transaction is still subject to regulatory approval, with an expected completion date by early 2013.