Asia Pacific's family offices are a nimble bunch and never more so than when it comes to ESG where they're already proving to be ahead of the regulators.
The company is now a three-way JV between AllianceBernstein, Hong Kong developer Sun Hung Kai Properties and Taiwan's Far Eastern International Bank. Deutsche will acquire the AllianceBernstein and Sun Hung Kai stakes and rename the company Deutsche Far Eastern Asset Management.
The move represents a strategic entry into the region's fourth-largest mutual funds industry for Deutsche - and a strategic retreat out of a JV that never got off the ground for AllianceBernstein.
For Deutsche, the acquisition gives it an immediate onshore presence. Previously it could only sell offshore products via a third-party master agent. Now it can directly tap a market that is growing rapidly in areas such as structured products and alternative investments.
James Wu, chief country officer at Deutsche in Taiwan, says Deutsche AM will be able to leverage its internal expertise through retail arm DWS Investments and its property specialist RREEF Alternative Investments.
An onshore business may also help the firm's institutional-development business woo Taiwan's big insurance companies and public pension funds, which are expected to increase international mandates as regulations on outsourcing ease this year.
TaiwanÆs Financial Supervisory Bureau has recently relaxed investment restrictions for Taiwanese insurers. Insurers are now allowed to invest up to 10% of their total assets under management in overseas real estate. Previously, regulators have also granted consent for insurers to invest up to 35% of assets in international securities.
The islandÆs four public pension funds û Public Service Pension Fund (PSPF), Labour Pension Fund, Labour Insurance Fund and Postal Saving Fund - have been active in outsourcing pension assets to international managers. These are expected to continue granting mandates ôof very reasonable sizes, at least a couple of millions each,ö regularly over the medium term, according to an industry source. Taiwan's pension funds need to invest overseas to beat low interest rates and diversify from the island's volatile stockmarket.
Far Eastern Alliance was set up in 2001 but as of the end of 2007 it remains the sixth smallest of Taiwan's 40 fund management companies, with only 0.5% market share.
Before Alliance Asset Management acquired Bernstein in the United States, its Australia arm had forged a joint venture with Sun Hung Kai to target Greater China opportunities, connecting Alliance's asset-management expertise with Sun Hung Kai's regional network. The JV was called New-Alliance Asset Management, and it in turn formed the Taiwan JV with Far Eastern International Bank.
AllianceBernstein got involved via the Australia business of Alliance Capital Management, before its 2000 acquisition of Sanford C Bernstein & Co in the US, which had already formed a seperate JV with Sun Hung Kai in Hong Kong called New-Alliance Asset Management. It was this structure that then signed a deal with Far Eastern International Bank for the Taiwan market - a series of structures that never served AllianceBernstein well.
AllianceBernstein bought out Sun Hung Kai's stake in New-Alliance in early 2007 in order to assume full control and to streamline the branding. It was unable to do so with the Taiwan business, which remained a source of irritation to AllianceBernstein executives, according to sources familiar with the situation - because of the inability to brand the JV properly, as well as the JV's lack of success. Far Eastern International Bank offered a distribution platform, but was but one of many unrelated businesses of the Far Eastern Group. Given the JV's small size, evidently this platform was never sufficient.
Moreover AllianceBernstein is primarily an institutional manager in Asia, not a retail player, so it may have decided it could still win mandates without a cumbersome onshore entanglement.
Executives at AllianceBernstein in Hong Kong and Taipei were unable to comment by press time.
Both AllianceBernstein and Deutsche Asset Management have enjoyed growth in the region. AllianceBernstein is now the ninth-largest manager of Asia-Pacific sourced assets, with $127 billion of Asian client money under management as of September. This makes it the second-largest independent active fund manager in Asia-Pacific, after Fidelity.
Deutsche meanwhile has also recently boosted its ownership of Harvest Fund Management in China to 30%. It has won a banking license and is preparing to launch a private wealth management business in Shanghai. Deutsche AM sourced $47 billion from Asia-Pacific as of September 2007, making it the 32nd largest regional player in terms of asset-gathering, according to AsianInvestor research.
Manulife appoints new COO; the head of investment stewardship at VFMC departs; June Wong joins Value Partners as president; State Street appoints head of Singapore and Southeast Asia, and head of Australia; BlackRock COO joins UBS AM as Australia and New Zealand country head; Pictet veteran named as Asia CIO; Nomura AM Malaysia head to step down; and more
Inflation or stagflation? Rising prices have sent worries across the market. Investors want to be fully geared with the right assets in the portfolio.
The Monetary Authority of Singapore’s recent move to tighten monetary policy will lower the impact of higher imported inflation and strengthen the local currency, experts said.
Leading LPs and GPs are collaborating to pool information in a bid to standardise ESG data reporting with the aim of bringing transparency to sustainable investing within the private equity industry.