Cazenove Capital Management is applying to the Hong Kong Securities & Futures Commission for licences to allow it to engage in wealth management advice and asset management in the territory.
The London-based wealth manager is keen to bring its model of long-term investing and advice to the region, pending regulatory approvals. “Very few wealth managers in Asia offer tailored asset allocation and impartial investment advice,” says Dominic Emmerson, director or private wealth management at the London-based firm. “There is a gap in the market.”
It comes after UK fund house Schroders moved to acquire Cazenove for £424 million ($648 million) late last month, in a deal pending regulatory approval.
Cazenove has been studying the Asia region for several years to see if it can bring something to the table. Emmerson says clients in Hong Kong and Singapore are still smarting from losses in structured products such as the Lehman Brothers-backed minibonds, or from seeing assets gated by hedge funds and real-estate funds.
The reality of providing wealth management in Asia today is more of a brokerage, transactional nature, versus the long-term independent advisory model favoured by Cazenove in the UK. Emmerson says the firm is aware of the differences operating in Asia, and intends to keep its costs low by transferring two people to Hong Kong once the office opens.
“We understand business models in Hong Kong are different. Our goal is for clients to view us as the conservative or core part of their portfolio; the part of the portfolio that they don’t have to worry about if there’s another financial crisis.”
He thinks the firm’s track record of mandates to outperform inflation could do well in Hong Kong, partly because it is more tactical.
Cazenove Capital decided to seek licences in Hong Kong rather than Singapore for several reasons. It felt the Cazenove name has some resonance in Hong Kong, thanks to an older corporate-finance business that was sold to what is now JP Morgan; Singapore seemed over-banked; and Hong Kong offers potential future business due to its proximity to mainland China.
The firm has $28 billion of assets under management, of which nearly $9 billion is managed internally, notably for UK and European equity, bond and balanced strategies. The rest is run by third parties, including brands well known in Asia, such as Aberdeen, BlackRock and Invesco.
The firm’s individual and family-office clients in Europe typically give it mandates in the $1-20 million range.