With €1.9tn in AUM, the joint venture would allow the pair to expand globally and speed up a push into private markets.

Generali and the owner of France’s Natixis Investment Managers agreed to jointly create a European asset manager overlooking $1.979 trillion.

The potential tie-up between Natixis Investment Managers and Generali Investments, creating a €1.9 trillion ($1.95 trillion) money manager, improves the strategic options for both parent companies, but it will come with challenges, Fitch Ratings said.

Generali and Natixis are planning to merge to create the ninth-largest investment manager in the world by assets under management, the companies said Tuesday.

Under the terms of the tie-up, BPCE and Generali Investments will combine their asset management operations in a 50-50 joint venture, people familiar with the situation said. A non-binding preliminary agreement could be reached as early as next week. It would still need to be approved by the relevant unions and authorities.

Assicurazioni Generali S.p.A. (Generali) and BPCE announced on January 21 that they have signed a non-binding Memorandum of Understanding (MoU) to create a joint venture between their respective asset management operations Generali Investments Holding (GIH) and Natixis Investment Managers (Natixis IM).

Natixis Investment Managers is set to merge with the asset management arm of Italian insurer Generali, creating the largest European asset manager by revenue.

Italy's top insurer Generali aims to reach a preliminary accord with Natixis Investment Managers to combine their asset management operations in order to submit the deal to its board on Jan. 20, two people close to the matter said.

The combined entity will have equal ownership, with each party holding 50% and sharing governance and control.