Fullerton and SBI unite to hunt for cheap bank stocks
The joint fund has an initial commitment of $60 million and will focus on financial institutions outside of Japan.
Singapore-based Fullerton Fund Management and Japanese venture capital firm SBI Holdings have jointly set up a fund that will invest in Asian financial companies.
The fund has an initial commitment of $60 million, with Fullerton and SBI Holdings contributing $30 million each. The fund will mainly target listed non-Japanese financial institutions that have become fundamentally undervalued due to the sell-off in stock markets caused by the US credit crisis.
The partnership is in line with SBI HoldingsÆ strategy of taking overseas partners in emerging markets and diversifying outside of Japan.
Unlike their US counterparts, Asian financial institutions have been relatively unscathed by the US credit crisis. Asian banks, in particular, have learned their lessons from the regional financial crisis in 1997 and have avoided over-extending credit.
It is unlikely, however, that the fund will immediately invest in financial stocks because an assessment of valuations and market sentiment has to be reconciled. While it is true that many financial stocks are now attractively priced with a long-term investment horizon in mind, no one knows for sure when the market will reach bottom and investors worldwide are still waiting for a comprehensive plan to rescue financial institutions in the US.
For its part, Fullerton is expanding its footprint in Asia though strategic partnerships, which it already has in Japan and other markets such as Korea, India, Pakistan and China. Just last week, Fullerton formed an investment partnership with ChinaÆs Bosera Asset Management that allows both fund houses to tap each othersÆ expertise.
Fullerton was set up as the in-house fund management division of Singapore state investment company Temasek Holdings in 1989. The company was spun off into a separate business unit in 2003, but continues to manage part of TemasekÆs $132 billion global portfolio. Now, it is aggressively pursuing the growth of its business, particularly in the area of third-party fund management.
As of August, FullertonÆs holdings in the financial sector included United Overseas Bank and Oversea-Chinese Banking Corporation.
The fund has an initial commitment of $60 million, with Fullerton and SBI Holdings contributing $30 million each. The fund will mainly target listed non-Japanese financial institutions that have become fundamentally undervalued due to the sell-off in stock markets caused by the US credit crisis.
The partnership is in line with SBI HoldingsÆ strategy of taking overseas partners in emerging markets and diversifying outside of Japan.
Unlike their US counterparts, Asian financial institutions have been relatively unscathed by the US credit crisis. Asian banks, in particular, have learned their lessons from the regional financial crisis in 1997 and have avoided over-extending credit.
It is unlikely, however, that the fund will immediately invest in financial stocks because an assessment of valuations and market sentiment has to be reconciled. While it is true that many financial stocks are now attractively priced with a long-term investment horizon in mind, no one knows for sure when the market will reach bottom and investors worldwide are still waiting for a comprehensive plan to rescue financial institutions in the US.
For its part, Fullerton is expanding its footprint in Asia though strategic partnerships, which it already has in Japan and other markets such as Korea, India, Pakistan and China. Just last week, Fullerton formed an investment partnership with ChinaÆs Bosera Asset Management that allows both fund houses to tap each othersÆ expertise.
Fullerton was set up as the in-house fund management division of Singapore state investment company Temasek Holdings in 1989. The company was spun off into a separate business unit in 2003, but continues to manage part of TemasekÆs $132 billion global portfolio. Now, it is aggressively pursuing the growth of its business, particularly in the area of third-party fund management.
As of August, FullertonÆs holdings in the financial sector included United Overseas Bank and Oversea-Chinese Banking Corporation.
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