Hong Kong-based alternative investment boutique Orion Partners spurned advances from potential acquirers in favour of partnering BNP Paribas Investment Partners (BNPP IP) and remaining independent.
BNP Paribas Capital Partners (BNPP CP), a BNPP IP subsidiary, has taken a minority stake in Orion, which specialises in Asian private equity and real estate investments, an area where the French firm lacked expertise.
“The Orion deal is part of a programme whereby we are on the lookout for expertise that we don’t have in-house,” said Gilles Guerin, chief executive of BNPP CP. “Rather than use a wide range of managers, it makes more sense to identify firms we like and have a stronger relationship with them.”
The firm has worked with Orion since 2002 and wanted the latter's existing team to remain running the business, so taking a minority stake was a perfect fit, Paris-based Guerin told AsianInvestor.
BNPP could have done a pure distribution deal, as it has with other firms, he noted, but preferred to establish a deeper relationship through ownership involvement.
BNPP CP runs some €5 billion ($5.5 billion) across all alternative asset classes, very little of which is sourced from Asia, but Guerin expects to see more money coming from clients in the region a result of the tie-up.
He said there would be no changes in respect of Orion’s personnel. Nor are there any plans for BNPP CP to give the Hong Kong firm any capital injections at this point, though the French firm could consider doing so if Orion were to make such a request.
From Orion’s perspective, about a year ago the firm decided to seek a strategic partner to provide a broad distribution channel and strengthen its global institutional credibility, said managing partner TK Chiang.
There was significant interest from different financial institutions in buying the business, he noted, but a key criterion was that Orion remain independent. Berkshire Capital Securities had advised the firm on the deal. Competition is fierce to buy local investment businesses to gain a foothold in the region.
“We knew BNP Paribas well, and they are one of the biggest and most highly-rated banks globally,” Chiang told AsianInvestor. “In addition, we have a lot of clients in Europe, where BNP Paribas obviously have a very strong foothold, and they are also developing a strong distribution channel in Asia.”
Moreover, Orion’s strategies are very country- and sector-specific, and it aims to make them broader and larger and expand the business into more regional and general strategies.
It had already partly done that by bringing in an infrastructure credit team last year, led by Charles Regan and Angus Davidson, formerly of WestLB Bank. This came soon after it hired hedge fund veteran Julius Wang to kick-start its hedge fund business.
Orion has also been expanding its range of strategies, most recently with the launch of a private equity fund focused on luxury and aspirational brands in October last year, as reported first by AsianInvestor. This followed the launch of its second Korea property fund and third Japan property fund, both also in 2015.
The Korea strategy has completed its fundraising, and the Japan fund is likely to hit its cap in early 2016. The ‘Brand Asia’ strategy should complete fund-raising this year, after first-closing in September 2015, noted Chiang, and a number of deals are already at the due diligence stage.
All Orion’s strategies are potentially of interest to BNPP CP’s clients, said Guerin. The French firm is already looking at raising money for the Brand Asia fund and at helping raise assets for the Japan fund as well.
“Every time Orion wants to launch a new product, we will take a look and see how we can help them raise funds,” said Guerin. “And when we see specific demand from our investors to tap their [Orion’s] expertise, we will make suggestions and help design a product to fit the bill.”
The partnership will target both institutions and high-net-worth individual investors. Smaller investors will likely go into the funds, while larger institutions may well award segregated mandates. Both are areas where Orion has had success, said Guerin.