Lyxor Finance, the fund management brand of the French banking giant Societe General, scored the naming and promotion rights for the only gold bullion exchange-traded fund (ETF) available in Europe. The group said it will take over the branding and distribution efforts for the fund from Gold Bullion Securities (GBS). The product, which trades on the London Stock Exchange, boasts assets of more than $700 million.
The fund will be renamed the LyxOR Gold Bullion Securities.
In related news, Lyxor announced that the fund would extend its listing to Euronext, the cross-border exchange that integrates the markets of Paris, Amsterdam and Brussells. Societe General will act as the primary market-maker. The new listing will make it easier for investors across Europe to trade the ETF, and should expand the market for the fund..
"We believe that LyxOR GBS will be a great success in Europe and are excited by the latest listing on Euronext," said David Escoffier, managing director and head of Equity Derivatives at Societe General, London. "We have extensive experience in making a market in listed products such as ETFs, warrants and certificates through out Europe."
The move instantly establishes Lyxor as one of the leaders in commodity-based ETFs, which many see as the next great growth engine for the industry. Lyxor is in a three-way battle with iShares and Indexchange for dominance in the European ETF industry, and this high-profile brand deal could give them a leg up. The GBS ETF in London was the first gold ETF in the world.
So what does GBS get out of the deal? Money, for one: Although terms weren't disclosed, chances are they didn't give the branding rights. But they also may get a more sophisticated distribution network in Europe, as Societe General's deep roots and contact with investors will make product distribution easier. Remember, GBS was founded by the World Gold Council with the purpose of boosting investors' appetite for gold; if Lyxor can help, that plays right into their plans.
"We are confident that this partnership with SG CIB will enable us to extend the distribution of exchange traded gold in the UK and Europe. Exchange traded gold is already widely held by investment institutions and pension funds and we expect this relationship will further broaden gold's appeal.