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BGI’s iShares makes €240 German acquisition

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GERMANY - Barclays Global Investors has agreed to pay €240m to acquire Indexchange, a provider of exchange traded funds (ETFs), from German bank HVB.

Indexchange will now be merged with BGI's own ETF operation in Germany which is called iShares. Each of the firms has €15bn under management, giving them a respective 24% share of the market.

Passive investment products, ETFs track main stock market indices. They are catching on with German institutional investors both because of the transparency from getting a market return and because fees are lower than for actively managed funds.

As reported by IPE, one of these investors is Continental, a German tyre and auto component maker traded on the blue-chip Dax equity index. Last month, Continental said it had put €300m from a new pension fund into ETFs. The products were supplied by Indexchange.

Chris Sutton, chief executive of iShares Europe, also noted that on the European continent Germany was emerging as the ETF provider's "most crucial market". In the last five months, iShares has expanded its business by 84% on an annualised basis.

German bank HVB, now part of Italian banking giant UniCredit, said the sale of Indexchange was part of its strategy to focus on retail, corporate and investment banking in Germany.

The acquisition of Indexchange comes just over a month after iShares announced that Andreas Fehrenbach, the former CEO of German asset manager Activest, had joined it as its new German head.
Fehrenbach stepped down as Activest's CEO in July amid the absorption of the German asset manager by Pioneer Investments. Dominik Kremer, Pioneer's German head, has succeeded him.
In a related development, German private bank HSBC Trinkaus & Burkhardt said Continental had appointed it as the custodian for the €300m in pension assets currently invested in ETFs.

As a result of this mandate and other recent ones, HSBC Trinkaus & Burkhardt said its assets under custody now totalled €143bn, almost double the year-end 2004 level of €76.3bn.

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