New wave of secondaries as Benelux banks reshuffle

Before the financial crisis, the likes of Dexia, ING and ABN Amro were respected names in the European banking industry. However, when the crisis bit and exposed the convoluted workings of many financial institutions – as well as their exposure to certain risks – the picture changed drastically. But while banks are looking to offload their holdings, secondaries players are benefiting from a wealth of opportunities.

In early December 2012, KBC Private Equity spun out from its parent company KBC Group (the second largest bancassurance company in Belgium), establishing KeBeK Management, led by those formerly employed by KBC. The spin-off was part of KBC's attempts to refocus its business on its core capabilities, after having received substantial government aid during the crisis. In October 2011, the banking group had already offloaded insurance unit Fidea, which was purchased by JC Flowers.

Just a week later, Hong Kong-based private equity firm GCS Capital acquired Dexia Asset Management (Dam) from its parent, the French-Belgian banking group Dexia. The bank received bailouts in 2008 and 2010, as well as strict compliance guidelines from the European Commission, which focused on the institution's risk exposure. At the time of deal completion, Dam had €80bn of assets under management. The deal to buy Dam is estimated to be worth about €380m.

Banks in the Benelux are undergoing a major reshuffle, resulting in a boom for the secondaries market.

Most recently, Robeco – Rabobank's asset management facility acquired back in 2001 – seems to have found a new owner. Rabobank, one of the only large banks in the region that did not receive government funding during the crisis, had been looking to get rid of the asset manager since last year. Now it might fall into the hands of Japanese financial services firm Orix Corporation, which is said to be ready to pay €2bn for the company.

The trend of banks disposing of non-core assets is not exclusive to the Benelux region, though its banking industry was perhaps more vulnerable than most to the 2008 crisis. More and more financial conglomerates realise that a return to specialism might be a more sustainable business model than continuous diversification out of principle. In addition, new rule frameworks such as Basel III upped capital requirements to a level that deems many marginal holdings unfeasible, putting them out into the market. These could be glorious times for secondaries players looking to pick up the pieces.

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• Topics
• Benelux
• Secondaries
• Belgium
• KBC Private Equity
• Netherlands
• Rabobank