US-based Casey Quirk, a management consultancy focused solely on the investment industry, has opened in Hong Kong with a view to advising Chinese fund houses as well as global and regional players.
Daniel Celeghin has moved from New York to set up and run the firm’s first non-US office, and is looking to hire four more staff initially. “A four-person office doesn’t sound big, but it is a very small unique subset of people I am looking for. It will take some time to fill the office, because I don’t want to just hire anyone.”
Casey Quirk will be in direct competition with large strategy groups such as Boston Consulting Group (BCG) and McKinsey & Co. Celeghin says these firms have traditionally dominated the consultancy landscape for the industry in Asia, but argues that his firm’s niche focus is a benefit.
“They are very formidable competitors, but for now we have an advantage,” he adds. “All we [cover] is fund management.”
“What my clients tell me is that both the two don’t have asset management specialists here in Asia,” he says. “They have people focused on financial services, but if there is an asset management project, they will tap into their specialist in the States.”
Neither BCG nor McKinsey responded to requests for comment of confirmation on this.
Casey Quirk’s decision to build a presence in Hong Kong comes after seeing increasing demand for its services in the region. Previously based in New York, Celeghin travelled at least five or six times a year to the region. “Frankly, the travel was becoming too onerous,” he says, “and we thought it was justifiable having a presence on the ground.”
So far, the firm has about 10 clients in Asia including Japan, with an even split between global and regional firms.
One group of clients Casey Quirk is targeting are Chinese fund houses, with a view to advising them on both onshore and offshore business.
But Celeghin admits this will be a challenge. Mainland asset managers are not big users of consultants, he says, so there is a lot of education needed there. “We are not investment bankers, we are not offering deals, we are not a law firm – it’s a service that is new to them.”
Yet working with mainland firms will involve recruitment challenges, suggests Celaghin. As well as hiring people with local language skills, he notes, it also means looking for people who know the industry well, whether through having a consultancy background, an interest or ability to be an adviser.
Of course, Casey Quirk is also advising global and other Asian managers on their regional operations.
Global firms are seeking help for their Asia-Pacific business, especially as they make initial forays into the market, says Celeghin. “The global headquarters might say to the regional CEOs: ‘Asia is big, run and make Asia a success. Here are some resources and a budget.’”
But firms are finding it increasingly tough to make a success of a funds business in the region, particularly given fierce competition, fragmented markets and ever tighter regulation, among other things. (See AsianInvestor’s series of features on growing an investment business both into and within the region, the last of which appeared in the February 2014 issue.)
Managers may need advice on which countries to focus on, how to structure their distribution channel and which products they should manufacture for the region, says Celeghin.
Global fund houses tend to sell products they already manufacture in their home markets, which they eventually find is not enough to gain market share, he adds. Hence they may need to know whether it makes sense to have a local manufacturing presence, and if so, how they should structure it, he adds.
Asian clients – mainly Japanese, Australian and Korean fund houses – face different challenges, such as to how to compete with global fund managers in their home markets, notes Celeghin. They are also looking into how to internationalise their businesses, whether in the region, Europe or the US.
Meanwhile, both regional and global fund houses have been asking about the potential opportunities from Asian passporting proposals, in particular the Hong Kong-China mutual recognition scheme.
For joint ventures involving a Chinese partner, questions are likely to focus on how to tap into the mainland while taking advantage of the JV’s onshore presence. Other firms without a Chinese presence are considering basing an investment team there to manufacture products for their home market, without raising funds on the mainland, says Celeghin.