UBS Fondcenter and Clearstream join forces in fund distribution

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Jan 21, 2020

 

UBS Fondcenter will be combined with Clearstream's Fund Desk to create a leading global B2B fund distribution platform with approximately USD 230bn in Assets under Administration (AuA). As part of the transaction, UBS and Clearstream will enter into long-term commercial cooperation arrangements. Increased scale and breadth of capabilities and extended local presence are expected to provide a compelling proposition for distributors and fund providers. Upon closing, which is currently expected in the second half of 2020, UBS expects to recognize a post-tax gain of approximately USD 600 million and a CET1 capital increase of approximately USD 400 million.

 

UBS announced that it has agreed to sell a majority stake (51.2%) in UBS Fondcenter ('Fondcenter'), part of its Asset Management business division (’UBS AM’), to Clearstream, Deutsche Börse Group's post-trade services provider. Upon closing of the transaction, Fondcenter will be combined with Clearstream's Fund Desk business, creating a top-two B2B fund distribution platform with a presence in Europe, Switzerland, and Asia.

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UBS will initially retain a minority (48.8%) shareholding in the combined business and will enter into an agreement under which it may sell its remaining shareholding to Clearstream at a later time.

The newly-combined business, to be called Fondcenter, will have over USD 230 billion in AuA and connect approximately 340 distribution partners with more than 450 fund providers, with over 75,000 investment funds and share classes available globally. As part of the transaction, UBS and Clearstream will enter into long-term commercial cooperation arrangements for the provision of services to UBS's Global Wealth Management and Asset Management business divisions and the Corporate and Institutional Clients unit of Personal & Corporate Banking.

Sergio P. Ermotti, CEO UBS Group AG, said: "We are delighted to reach this agreement with Clearstream, building on the successful relationship we have had with them and Deutsche Börse Group for many years. Through this transaction and our long-term cooperation arrangements, we can achieve greater scale and breadth of offering for our clients and create significant value for our shareholders."

Commenting on the transaction, UBS AM President, Suni Harford, said: “With the increased breadth of capabilities and Clearstream's long-term commitment to developing the combined business, we are creating a highly compelling proposition for our clients." She added: "At the same time, this move enables us to further focus the Asset Management business on the execution of our strategic priorities to drive further profitable growth.”

The employees of Fondcenter will transfer to Clearstream as part of the sale and the management team will take senior positions within the combined business, providing continuity for clients and fund providers.

The transaction is subject to customary closing conditions and is expected to close in the second half of 2020. Upon closing, UBS expects to recognize a post-tax gain of approximately USD 600 million and a CET1 capital increase of approximately USD 400 million UBS will deconsolidate Fondcenter and account for its minority interest as an investment in an associate.


Articles authored by Martin Signer

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