Allianz Global Investors Kapitalanlagegesellschaft mbH and Xchanging, the international, pure play BPO company, have signed contracts to establish an enterprise partnership to provide retail investment account management services. Subject to competition clearance, Xchanging, through it’s Financial Markets business, will hold a 51 percent share in the Hof-based Fondsdepot Bank GmbH and will take over the operational control of this unit effective from 1 November 2007 at the latest.
The strategic goal of the partnership is to strengthen and grow the position of Fondsdepot Bank as the high-capacity, neutral provider in retail investment account management and to generate third-party business for the cost-effective platform. The partners will focus on expanding their business with independent financial consultants and broker pools and on exploiting the business potential arising from the growing trend towards the outsourcing of administrative processes.
The partnership will provide Allianz Global Investors with guaranteed cost savings through a multi-year service agreement with clearly defined service targets.
“With this partnership we are offering exciting future prospects for both Fondsdepot Bank and the operations in Hof. Moreover, we are leading the way for the consolidation of an essential part of the asset management value-added chain”, Dr. Thomas Wiesemann, CEO of Allianz Global Investors KAG, comments.
The partnership endorses Xchanging’s strategy as an international pure-play BPO company and brings a modern technology platform for retail investment account management services. Furthermore, it allows Xchanging to enter the European growth market of asset management and gives the outsourcing specialist the scale to provide new customers with attractive retail investment account management services to add to those offered in securities processing.
David Andrews, Xchanging CEO said, “we are delighted to partner with such a prestigious international organisation as Allianz Global Investors. This, together with our other partnerships signals our leadership in processing for the financial services industry.”
As a result of the partnership with Xchanging, Fondsdepot Bank will gain additional momentum in the areas of process optimisation and efficiency improvement. This will significantly increase Fondsdepot Bank’s productivity. The partners stress that operational stability during the transition phase is assured as the business will remain on the same secure platform. With continuity of both management and staff, the Fondsdepot Bank customers will see continued high levels of service standards.
The 8 year service agreement has an initial contract value of €400m. Supporting this, Xchanging, through it’s Financial Markets business, will acquire 51% of Fondsdepot Bank for a cash payment of €13m and has granted a put option to Allianz Global Investors for the remaining 49% for €13m exercisable after 4 years. At 31 December 2006 the net assets of Fondsdepot Bank were €26m and the gross assets were €38m. At completion there is expected to be in excess of €10m cash in the balance sheet. This is an important investment for Xchanging to extend its balanced onshore/offshore strategy with a high quality, near-shore facility in Hof. Fondsdepot Bank is regulated by the Bundesbank and BaFin, has a partial banking licence and employs more than 400 people.