Fullerton merging with NTUC Income

Fullerton Fund Management will manage the insurer’s public-asset portfolio as part of the all-Singaporean deal, say sources familiar with the matter.
The all-Singaporean deal was mooted at least 18 months ago, say sources
The all-Singaporean deal was mooted at least 18 months ago, say sources

Fullerton Fund Management and insurance firm NTUC Income are merging in a deal that is set to strengthen the investment operations of both Singaporean firms, people familiar with the matter told FinanceAsia's sister publication, AsianInvestor

As a result, they noted, Fullerton will take over the management of NTUC Income’s public-market portfolio, which is estimated to account for about 80% of the insurer’s S$29.4 billion ($20.1 billion) under management.

Both parties should benefit from what is believed to be a government-directed move, industry sources said: NTUC Income will gain more investment capabilities and a new growth engine in the form of a third-party funds business. Fullerton, with AUM of S$16.5 billion ($12.2 billion) as of March 31, will gain greater scale and resources to help it attract more clients.

A spokeswoman for Fullerton gave the following statement by email: "As part of our corporate policy, we do not comment on industry speculation. In the event of corporate announcements, we will keep you updated."

AsianInvestor could not reach any executives at NTUC Income by press time.

"Smart strategy"

The deal comes alongside a revamp at NTUC Income in the past few years, said a Singapore-based consultant, who asked to remain anonymous. The insurer has been moving to strengthen its portfolio management set-up, boost investment in systems and risk management and focus more resources on asset allocation, he said.

Combining with Fullerton may be a quick way to help reach this goal, added the consultant. “It sounds like a very smart strategy.” 

The deal comes amid a trend towards consolidation among asset managers with the aim of achieving greater heft and cost-efficiencies, with Aberdeen Standard Investments and Janus Henderson Investors two big recent examples.

NTUC Income is the senior partner because of its size, and Mark Wang, the insurer’s chief investment officer, is expected to remain the overall head of the investment team, said several individuals. But there are many moving parts to be dealt with, noted sources, which explains why no public announcement has been made as yet.

Still, both participants are ultimately government-linked entities, so the merger process can be managed more easily than in cases involving two entirely private-sector entities, said a senior individual familiar with both firms, who asked not to be named. 

Fullerton is owned by state investment firm Temasek, while NTUC Income was set up by the government, though is not thought to be directly state-owned. 

Time frame

The deal between the two was mooted as a possibility at least 18 months ago and agreed some six to nine months ago, but it has taken a while to work out the details, said the unnamed individual. "It is intricate because of the stakeholders involved,” they noted. There are unlikely to be major layoffs, the person added, although there is significant overlap between the investment teams.

There is also the challenge of combining two very different business cultures, noted sources. The question is how Fullerton will expand its third-party business and manage those commercial aspirations while operating as NTUC Income’s captive asset manager.

Several other insurance groups operate similar set-ups, including UK insurer Prudential (with Eastspring), Canada's Manulife (with Manulife Asset Management) and Germany's Allianz (with Allianz Global Investors).

There have already been senior changes in personnel in the past year at Fullerton, most notably the departure of Manraj Sekhon, former CEO and CIO, in November last year. Later that month Patrick Yeo was promoted to CIO from head of fixed income, and there have been other appointments, but no new CEO has been announced as yet.

In addition, Gopi Mirchandani left the role of head of sales strategy in December and has since become Singapore CEO of NN Investment Partners. Her role was absorbed into that of Trevor Chudleigh, Fullerton's head of business development.

Sources suggested these changes were likely to have been at least partly down to the merger.

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