The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
But more importantly, he doesnÆt believe that AUM is a meaningful figure. While market share counts, heÆs more focused on profitability. (Which he doesnÆt disclose either; AsianInvestor magazine estimates the firm sources $18.6 billion of its global AUM of $247 billion from Asia Pacific û see our December 2006 editionÆs AUM rankings.)
Since Lindman arrived in Hong Kong in September 2004 to replace outgoing Asia CEO Frank Kusse, the firmÆs objective has been to focus on higher value-adding activities.
Kusse ran the firm from 1998 to 2004 and really built ABN AmroÆs regional asset management franchise. Despite the hardships of the dotcom bust, the Asian financial crisis and Sars, Kusse was able to take a patchwork of old businesses and create a regional identity. (Kusse, after serving at the firmÆs headquarters in Amsterdam, left last year.)
ôHe was an entrepreneur,ö says Lindman of his predecessor. ôHe created his own destiny instead of waiting for the markets.ö
On the product side this meant selling whatever could muster demand in painful economic conditions, which largely meant guaranteed funds. Strategically, Kusse forged two major deals. First was the acquisition of Kwang Hua Asset Management in Taiwan, a leading local firm built mainly on bond funds. Second was the launch of one of ChinaÆs first two Sino-foreign joint ventures in asset management, taking a 33% stake in a JV company with Xiangcai Securities as the majority partner.
Lindman says he arrived in 2004 to find a growing asset management business, but one that was self-contained within the region. Lindman, a Swede who had previously run the firmÆs Nordic business, came with a new brief: to integrate the asset management arm into the broader universe of ABN Amro Asset Management.
ôThe decision was to maximise the benefits of being a part of a global organisation,ö Lindman says. Functionally this led to a matrix hub-and-spoke model involving eight local sales offices reporting into headquarters in Hong Kong. But the more important outcome was the decision to focus on selling the firmÆs international capabilities, leveraging the ABN Amro brand and expertise of the global asset management organisation.
This meant that certain local businesses would be shed. A pensions business in Khazakstan was the first to go, followed by the local Taiwan business in 2006 once regulations eased on distributing offshore products.
At the same time, ABN Amro AM opened a rep office in Seoul and retained its securities investment consulting enterprise (Sice) in Taiwan in order to sell international products to those markets.
Kusse had left the Kwang Hwa business in good order: it was one of the few bond houses to not have been tainted by a massive crisis in TaiwanÆs structured bond products. But the firm decided to sell a low-margin bond business (to ING Investment Management) and focus on punchier international products such as equities, funds of hedge funds and other alternative concepts. This is a good example of reducing AUM but moving into higher-margin businesses.
The firm does retain three onshore, local-for-local businesses in markets where it is difficult to sell international products and where ABN Amro Bank has a strong franchise: India, Indonesia and China. The firm was also able to increase its China JV stake to 49% with a new partner from the Tianjin municipal government when regulations forced Xiangcai to sell its stake.
The restructured JV, ABN Amro Teda Fund Management, raised RMB8.5 billion late last year, making this the largest fund launch in ABN AmroÆs history. But the firm is trying to steer away from IPO-led business or reliance on guaranteed funds. Where possible, like in Hong Kong, it is building long-term distribution relationships.
It has recently sealed a partnership with Bank of China Life Insurance in Hong Kong to sell retirement products, alongside an existing relationship with Manulife. Such arrangements donÆt exist in China or India, given the IPO culture in those markets, but Lindman is optimistic, noting the recent unofficial hiatus on fund IPOs imposed by Chinese authorities will force the industry to focus on continuous sales of existing products, at least for a while.
ABN Amro AM has also recently opened a Dubai office that reports to Lindman. Dubai is quickly becoming a third offshore centre along with Hong Kong and Singapore for private banking. This office will sell ABN Amro investment products to retail and high-net-worth individuals in the Middle East, including native Arabs and resident Asians such as non-resident Indians. (Institutions there will continue to be served from ABN AmroÆs London office.)
Regionally the firm sees the biggest opportunities selling higher-value products to retail and wealthy individuals. The institutional business is large, but caters mainly to central banks. It is therefore oriented around fixed income and is stable. Retail and HNW is growing more quickly, reflecting the enormous wealth creation taking place throughout the region. Lindman says the firm is gearing up its regional capabilities in areas such as multi-manager solutions, leveraging off affiliate AA Advisors, a Paris-based platform; funds of hedge funds via recently acquired International Asset Management; and property funds. The firm is currently building a fund of private-equity funds as well.
Lindman believes the industryÆs growth prospects look bright both in the short and long run. Markets such as China and India will continue to expand as their economies grow. ôIt would take a lot to derail this,ö he says. Regulation in local markets continues to move toward international norms, reducing risks such as TaiwanÆs structured bonds fiasco or IndonesiaÆs funds meltdown in 2005.
If there has been one disappointment so far, says Lindman, it has been the slow take-up of offshore investing by ChinaÆs qualified domestic institutional investors. But QDIIÆs lacklustre debut is largely explained by the renminbiÆs appreciation.
ôQDII didnÆt meet our expectations,ö Lindman says. ôBut it was more than compensated for by the huge success weÆve had in ChinaÆs retail funds market, which has surpassed our expectations.ö
Mega players Nippon Life and Dai-ichi Life are looking for opportunities in higher-yield single-A US corporate bonds, which offer more appealing yields than stagnant domestic offerings.
The “lower for longer” monetary policy and stimulus packages, coupled with the rolling out of vaccine programmes favorably support real estate investing in the region, with offices and data centres presenting forward-looking opportunities.
As US fixed income default rates rose and yields fell during the pandemic, are Asian bonds, which have had more stable yields through 2020, looking more attractive?
Insto roundup: Norway's Oil Fund praises China governance efforts; NPS commits $100m to taxi-hailing app
Norway's Oil Fund welcome Chinese proposals improving transparency and shareholder protection; HK's MPF assets surge 35% year on year; Korea's NPS commits $100m to TPG consortium to invest in taxi-hailing app; Poba commits W270bn to European property; Malaysia's EPF sees investment income rise 59% year-on-year in first quarter, and more.