acquisition of pimco - allianz · • strong european asset management manager operations •...
TRANSCRIPT
Acquisition of PIMCO
Munich, November 1st, 1999
Page 1
Cornerstones of a strategic transaction
4 Profiles
4 Transaction rationale
4 Deal structure
Allianz PIMCO• Largest global insurance company • Third largest quoted US fund• Strong European asset management manager
operations • Specific fixed income manager• Strong European presence • Excellent track records across
multi-products
• Become a global asset management business ranking among the top 10 asset managers with more than 600 US$ bn AuM
• Create a pre-eminent global fixed income manager under the leadership of PIMCO
• Create a strong multi-style equity operation under the leadership of Allianz
• Approximately 70% of PIMCO Advisors L.P. purchased for 3.3 US$ bn• Closing March 2000, following PIMCO unit holder vote• Slightly dilutive in 2000, accretive from 2003 onwards
Page 2
Agenda
4 Profiles
4 Transaction rationale
4 Deal structure
Page 3
Allianz: a global insurer and asset manager
AllianzEuro 70 bn market
capitalization106,000 employees
68 countries
ProtectionNon-life
insurance
ProvisionLife and health
insurance
PerformanceAsset
management
46 Euro bn premiums written (IAS, 12/98)- thereof non-life: 66%- thereof Europe: 85%
366 Euro bn AuM (6/99)
Profiles
Page 4
Allianz: asset management coordinated by AAMas per 06/30/99
• Coordination of global Allianz asset management activities by Allianz Asset Management GmbH (AAM)
• Global investment products with access to regional expertise
• More than 250 managed funds worldwide
• Strong investment track record: 1998 for example 5 times ranked 1st in Micropal-Award
Asset mix of total AuM 366 Euro bn
Product mix of third-party AuM 42 Euro bn
Fixed Income
66%
Equity31%
Others3%
Retail34%
Unit-linked Products
20%
External Managers
21%
Institutional25%
Profiles
Page 5
Allianz: strong distribution in Europe
Germany 14,000 30,000
France 2,950 300 4,250
Spain 12,000 350
Italy 2,200 1,000
Greece 2,800 3,700
Austria 1,700 50
Total 35,650 1,700 37,950
General Specialized Othersales force financial advisors financial advisors*
*) Includes part time agents
Source: Allianz company data
Profiles
Page 6
PIMCO: one of the best known US-asset managersas per 09/30/99
• Third largest publicly traded investment manager
• 256 US$ bn in assets under management
• Leading active fixed income manager in the world
• 53 mutual funds for institutional and retail clients
• 85% of funds (AuM) are rated **** or ***** by Morningstar
• 1,600 institutional clients, including 1/3 of the 200 largest US corporations
• Superior investment performance and track record
Asset mix of total AuM 256 US$ bn
Product mix of total AuM 256 US$ bn
Source: company information
Fixed Income
63%
Equity36%
Money Market
1%
Institutional Mutual Funds19%
Retail Funds19%
Institutional Separate Accounts
62%
Profiles
Page 7
PIMCO: a wide array of capabilitiesas per 09/30/99
Stocks Growth
PIMCO Equity
Advisors AuM: 6.2 US$ bn
PIMCO Group
BondsTotal Return
Stocks Value
Stocks Quantitative
Stocks GARP
RetailDistribution
Stocks Value
Pacific InvestmentAuM: 181.5
US$ bn
OppenheimerCapital
AuM: 55.7 US$ bn
ParametricAuM: 3.9 US$ bn
Cadence Capital
Management AuM: 6.5 US$ bn
PFD (PIMCO
Fund Distributors)
NFJ AuM: 2.2 US$ bn
Source: company information
Profiles
Page 8
Fiscal year ending December 31st CAGR
1996* 1997* 1998 Q3 1999 96-98
AuM (US$ bn) 158 200 244 256 24%
Revenues (US$ mn) 567 705 852 243 23%
EBITDA (US$ mn) 211 261 302 86 20%
Margin 37% 37% 35% 35%
PIMCO: key financials show strong growth
*) Pro forma including Oppenheimer Capital Source: company information
Profiles
Page 9
Agenda
4 Profiles
4 Transaction rationale
4 Deal structure
Page 10
Growth of asset management for third parties as third core business of Allianz
Superior management of insurance assets
Broadening the scope of equity operations
Strong presence in the important US-market
Expansion into the growth markets Europe and Asia
Expansion into Emerging Markets
Allianz PIMCO
Goals of Allianz and PIMCO are perfectly meshed
Building on fixed income investment expertise and brand
Transaction rationale
Page 11
‘Crown Jewel’ transaction creates a leader in global asset management
• Combination of PIMCO’s US market know-how with Allianz’ strong presence in Europe
• Chance to be first mover in emerging European fixed income markets beyond background of European fixed income markets structures migrating towards US fixed income market structures
• Allianz and PIMCO share a dedication to be a top-five competitor in their chosen markets
Transaction rationale
Page 12
Creating a single global competitor
Performance of Additional revenues for Allianz’ fixed income assets owing to PIMCO’s insurance assets superior fixed income asset management capabilities
Equity styles ‘Value’ style of Oppenheimer contributes to Allianz’ portfolio management approach
Brand Substantial improved brand awareness with global institutional investors on account of PIMCO brand
European Distribution of PIMCO products through Allianz’ European institutional distribution and retail distribution network
Expansion Combined resources and easier penetration into Asian market by jointin Asia development of Asian strategy
Know-how Increased product breadth and product know-how for both partners
Transaction rationale
Page 13
Allianz-PIMCO becomes a top 10 asset manageras per 12/31/98
1 UBS Switzerland 1,1452 Fidelity US 7863 Kampo Japan 7024 Credit Suisse Switzerland 6805 AXA Group France 6556 Allianz+PIMCO Germany 6477 Barclays UK 6168 State Street US 4959 Merrill Lynch US 48910 Vanguard US 448
. . .
. . .
11 Allianz Germany 403. . .
. . .
29 PIMCO US 244
Source: Pensions & Investments/ Watson Wyatt
Rank Firm Country Total AuM (US$ bn)
Transaction rationale
Page 14
Allianz and PIMCO will have significant presence in major investment markets worldwide
Transaction rationale
Page 15
The transaction will generate a significant know-how transfer between USA, Europe and Asia
Jointdevelopmentof Asia
Mat
urity
of m
arke
t US
Asia
Europe
Transferknow-how / people in• Portfolio management• Research• Operations• Direct distribution
Anticipated time of development
Transaction rationale
Page 16
Agenda
4 Profiles
4 Transaction rationale
4 Deal structure
Page 17
Allianz acquires approx. 70% of PIMCO for 3.3 US$ bn
Deal structure
Target PIMCO Advisors L.P
Price per unit 38.75 US$
Number of units Approx. 85 mn (≈ 70%)
Aggregate price 3.3 US$ bn
Payment Cash
Closing Expected in March 2000
Page 18
The transaction is fairly priced for both partners
By all metrics, the transaction is fairly priced relative to other premiere transactions
Purchase price of 3,310 US$ mn
=> Price / 1999e AuM1 1.8%
=> Price / 1999e EBITDA1 14.5x
1 Forecast: Putnam, Lovell, de Guardiola & Thornton, Inc.
Deal structure
Page 19
Financial impact on Allianz*
Deal structure
Financing Pure debt financing (probable components: exchangeable, straight bond, internal group financing)
Rating No change of S&P ‘AAA’-rating expected
Goodwill Tax-effective amortization over 15 years
Earnings per share Dilution of approximately 0.3 Euro (EPS 1998: 7.5 Euro) in 2000, positive impact of about 0.7 Euro in 2003
Cash flow per share Positive impact of approximately 0.5 Euro already in 2000
Return on investment Return on investment - based on cash flow - exceeds Allianz’ cost of capital of 7.9% in 2003
*) Own estimates
Page 20
Organizational structure of Executive Committee
Functions of Executive Committee• Overall Allianz-PIMCO business strategy and planing• Allocation of capital• Liaison with other Allianz executive and line functions
Bill ThompsonPresident of
AAMCEO PIMCO
Markus RiessCOO of AAMHead, Retail Distribution
Udo FrankCo-Head
Global Equity
Ken PooveyCo-Head
Global Equity
K.-H. LoweCFO
Allianz Leben
Bill GrossCIO PIMCO
Joachim FaberCEO of
AAMChairman
DeputyChairman
Non-executive Ex-officio
Deal structure