The start of 2003 saw a flurry of activity at CDC IXIS Asset Management, which began seeking ways to expand its institutional and high-net worth fund management business out of its Singapore hub into North Asia. It hired Michael Chan from Dexia Fund Services in February to head up marketing for Hong Kong and Taiwan, while regional managing director Wen Lo began looking at office space in Hong Kong.
Then came the outbreak of the Sars virus, which put an end to office shopping and left Chan trying to network with prospects over the telephone from Singapore. Although Sars has dealt the firm a setback, Lo says it is still considering setting up an office in Hong Kong in order to step up its efforts to woo institutions in North Asia, as well as initiate new strategic partnerships or acquisitions.
CDC IXIS Asset Management is a unit of Paris-based CDC IXIS, which is majority owned by the Caisse des Dépôts et Consignations, a major French bank. CDC IXIS Asset Management is the fifth-largest asset manager in Europe, with about $320 billion under management, of which $300 million is managed by investment pros out of Singapore.
Lo says the firm moved into Asia, Japan and Australia about four years ago. In Tokyo it established one office for managing Japanese assets and another for marketing the global suite of products, while in Sydney it sells a domestic product to local institutions. The Singapore office now has 11 people, including five investment professionals and four marketers - including Chan and Roland Teo, who heads up business development for Southeast Asia.
As a relative newcomer, CDC IXIS-AM may have a lot of assets from global clients but outside of Singapore hasn't dented the institutional market yet. "We concentrated first on Singapore and now that we've stabilized the business, it's time to go north," says Lo. "We see three important markets there, Hong Kong, Taiwan and Korea. And of course there's the El Dorado of China."
For now Lo and Chan's focus will be Hong Kong and Taiwanese institutions, as Korea is a harder nut to crack. In addition to direct marketing, the firm is interested in creating distribution arrangements. "We like to wrap our product with a distributor and white label it under their name," Lo says. "We have a relationship with OCBC on this basis."
The firm is also keen to develop ties with private banks in the region to introduce its products to high-net worth individuals.
CDC IXIS-AM is confident it can meet such investors' needs thanks to its acquisition three years ago of Nvest in North America for $2.3 billion. That deal brought a suite of brand names into the French firm's domain, including Loomis Sayles, known for its specialist bond funds; value manager Harris Associations; quant house Westpeak Global Advisors; real estate investment trust specialists AEW; and others. This has given the firm a huge range of niche players that provide competitive products.
In China, the firm has looked at possible joint ventures with domestic fund managers. So far, "We haven't identified a partner we think will accept our conditions," Lo says.
In Taiwan, the firm inherited a passive, minority stake in Grand Cathay Securities Investment Trust from the Nvest deal. But CDC IXIS-AM wants to go further. "With regulations as they are now, it's hard to be active as a foreign partner," Lo says. "Most other foreign houses in Taiwan have gone to owning a majority of their Site."
Nonetheless the firm would prefer to work with a partner than go it alone. "We're ideal for any local partners," Lo says. "We're not interested in being a standalone player in any regional market; we'd rather share expertise."