Following up on a 1998 decision to expand aggressively out of its European redoubt, ABN Amro Asset Management is in the process of growing its investment team, product range and business relationships throughout this region, says Frank Kusse, CEO for Asia Pacific. The firm’s assets under management (AUM) in Hong Kong grew last year from Eu3.8 billion ($3.59 billion) to Eu7.5 billion, and its target is to manage Eu20 billion within five years – much of which will come from Japan. The firm’s global AUM is Eu135 billion.
On the people front, the firm is looking to hire five more investment professionals in Hong Kong, bringing its team to 16 this year, as well as at its offices in Singapore, Taiwan, Japan, Thailand and Indonesia. That follows on efforts in late 2000 to put in place a new business development team, capped by hiring Esmond Quek in October, from British American Tobacco, as regional head of marketing. Kusse says in particular demand will be finding technology, media, telecom and banking analysts and portfolio managers.
Second, the firm has great ambitions to launch more Asia-oriented products. It hopes to obtain Hong Kong Securities and Futures Commission approval by February for a Japan-focused behavioural finance fund, to complement two existing behaviour finance funds in Europe. These funds delve into the academic world of studying human behaviour. The gist is that these quant-heavy funds ignore herd mentalities and human psychological foibles to take advantage of temporary market anomalies.
This new product will be headed by Solange Rouschop, who transferred three months ago to Hong Kong from Europe, where she was involved in product development. Rouschop says more products will follow this year, including lifestyle funds and alternative investment vehicles catering to Asian clients. Several are in the process of receiving SFC approvals.
Third, the firm is building partnerships and alliances around the region. Its biggest move was last year’s acquisition of Kwang Hwa Asset Management, a leading Taiwanese fund house. It also finalized a strategic alliance with Sumitomo Life in Japan. Now in the works are deals in China and India.
ABN Amro Bank already has rep offices and two branches in China, and the Kwang Hwa deal gave it a small office in Shanghai that Kwang Hwa had quietly been developing. Now ABN Amro is applying to turn that into an asset management rep office, and hopes to win Beijing’s approval by mid-year. In addition, the firm is negotiating with one of China’s 10 local fund houses to act as an advisor; it hopes to finalize that partnership next month, and to expand that relationship to a joint venture post-WTO. On the institutional side, the firm is also in talks with a Beijing-based university to establish a faculty for pensions, in order to foster the industry.
And in India the firm is obtaining the necessary licenses to establish an asset management business. It is talking with senior individuals in the industry to come on board, and hopes to announce a CEO for India by mid-year.
Not everything will come at once, however. In Hong Kong, ABN Amro maintains its view that servicing the new Mandatory Provident Fund market is too crowded. Kusse says once the market grows to a size comparable with Singapore’s Central Provident Fund, it will make sense for ABN Amro to become a service provider, but he has no idea when that will happen. And in South Korea, the firm is in talks with a domestic company to form a strategic alliance, but negotiations remain difficult. Kusse says last year he almost forged a deal but, without going into the details, explains it fell through. “It’s hard to find reputable partners, relationships are difficult to manage, and when you acquire someone you acquire their problems as well,” he says.
Separately, the firm expects to expand its regional distribution. Currently, Standard Chartered Bank and ABN Amro Bank, as well as a number of private banks, distribute the firm’s retail product. Although Kusse says deals are afoot to expand these outlets, he declined to go into detail.
