Bradesco AM to expand in Asia beyond Japan
São Paulo-based Bradesco Asset Management (Bram) plans to ramp up its Asia effort by putting a sales executive in place in Hong Kong and emphasising the attraction of Brazil's infrastructure sector.
The individual will most likely be put in place in the second half of the year in Bradesco Securities’ Hong Kong office, which opened in February. (Both the funds and securities units are part of Brazil’s Bradesco group, one of the country’s largest banks.)
“We certainly see the second half of the year devoted to Asia,” says Joaquim Levy, Bram's recently appointed chief executive. The strong performance of the Brazilian stock market in 2012 – which has risen 16% in Brazilan real terms (26.% in dollar terms) in the first two months of the year – in part, has led the firm to seek to consolidate its position at home for the time being, he tells AsianInvestor.
(Previously Bram's chief strategy officer, Levy took over in January from Denise Pavarina, who now oversees private equity, private banking and asset management at the bank.)
Bram already has an office in Tokyo and a funds distribution partnership with Japanese bank Mitsubishi UFJ, worth about $1.5 billion across fixed income and equities. That accounts for the vast bulk of Bram’s $1.6 billion of AUM from non-Brazilian clients; it has $125 billion in AUM globally.
The firm’s products sold in Japan include a bond fund, broad equity fund and a small-cap fund, says Levy, and "they were pretty successful, despite all that happened last year in Japan and a less dynamic stock market in Brazil”. He is referring to the -18.1% fall in Brazilian real terms (-27.% in dollar terms) in stock prices and March's earthquake and tsunami.
The bond fund returned +12% in yen terms in the 12 months to the end of February in addition to its monthly dividend payment of ¥140 per share. The broad equity fund fell -4.1% and the small-cap fund rose 8.6% in the same period.
“Our idea in broad terms is to replicate this model elsewhere in Asia,” says Levy, citing Australia, for example, as an interesting market for annuities.
The firm’s initial efforts in Asia ex-Japan have focused on cultivating institutional clients. But it is now eyeing a move into wholesale and retail business and is trying to work out what would be the best way to do so, says Levy: through partnerships or other agreements perhaps. Either way, having someone on the ground will help Bradesco AM build relationships.
As for which products it would expect to sell in Asia, “it depends on the different environments and geographies”, says Levy. “It’s hard to say which types of clients and products [we will focus on] before we get there. It also depends on what will be the best types of partnership to establish.”
Bram does plan to put some of its Ucits IV Sicavs on the shelves of international banks that distribute to high-net-worth or mass affluent individuals. “Hong Kong and Singapore are very good platforms and have increasing demand for Brazilian assets,” he adds.
“In terms of products I think we are moving to a new phase in Brazil,” says Levy, pointing to the particular attraction of the country's infrastructure sector.
He cites the government’s sale in February of concessions to three groups to revamp three airports in Brazil, which raised about $14 billion. The deal “heralds a new wave of infrastructure projects that will be financed by private sources domestically as well as abroad",” says Levy.
There are many ways to package such deals for investors, he adds, suggesting that these long-term, “solid” projects would attract strong interest in Asia.
Levy also remains bullish on Brazilian corporate bonds, the benefits of which he spoke about at an AsianInvestor/FinanceAsia conference in late 2010 in Hong Kong. (Click here for photo highlights from the event.)
In addition, he expects stocks geared towards the domestic Brazilian market will perform better this year, following the slowdown in 2011.
On the alternatives side, Bradesco AM runs a small private equity fund, which has been marketed in Asia and Europe; it amounts to $200 million that invests in Brazilian companies. Levy sees the product gaining interest from Asian investors.
“The PE business in Brazil has two major strengths,” he says. “One, there are several large infrastructure and oil-related properties [to invest in], and two, [it is common] for several good companies in one sector to consolidate, then go to the stock market."