The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
In establishing a transition management operation in Hong Kong, Deutsche Bank is moving away from the traditional centres of this service, which are typically found in Australia or Japan. Setting up last year, it is the only bank to run transition management out of Hong Kong.
ôWe knew we had to differentiate ourselves, given that transition management is such a highly competitive marketö says Denis MacCarthy, Deutsche BankÆs co-head of Asian equity sales in Hong Kong. ôFor us it was clear that in order to deliver the kind of service that would set us apart, we needed to build up resources in our Hong Kong hub.ö
This allows Deutsche to be closer to its range of institutional clients that are now found not only in Hong Kong, but in other Asian markets like China, India, Japan, Korea, Taiwan and Singapore. According to the bank, Hong Kong was an obvious choice from which to re-focus its transition management business, given the doubling of pension assets in the territory in little under 10 years. Additionally, it places it on the doorstep of China, which will also see dramatic growth in pension assets in the coming years and require manager shifting to close the return gap it currently faces.
From Hong Kong, the bankÆs derivatives trading and structuring platform supports its newly established transition management team, which is led by Tom Clapham, director of transition management. He joined the firm in October of last year from Mercer Consulting in Singapore and now leads DeutscheÆs transition marketing and origination efforts in Asia.
The bank is quick to admit that acceptance and usage of transition management is relatively small in Asian markets, but believes that clients are now really seeing the benefits of the service, which are offered by custody banks, broker-dealers and consultants amongst others.
ôAsia will follow a natural catch up to markets like the US, Europe and Australia and in terms of transitions, this region is a small percent of the global volumes,ö says MacCarthy. ôBut where clients can invest is changing very quickly and they are quickly developing and embracing transition management and are often leading the communication with us.ö
However, its reemergence in the regional transition management space will not be without challenges. First of all, there is conception by many institutional investors like pension funds that the costs involved with transition management will not outweigh the benefits. Secondly, there is also an education gap between Asia and more mature markets, not to mention a lack of harmonisation between the markets, which means that transition managers need to treat every country individually.
ôThe status quo is different in every market in Asia, but we still believe that this region is currently the best opportunity for transition management anywhere in the world,ö says Clapham. ôThe scale and pace of change for institutional investors in astronomical and given the growing rate of sophistication in the market, we believe our in-sourced model will do well in Asia.ö
Thus far in 2007, Deutsche Bank has been successful in its reemergence in the transition management space, snaring a $2 billion transition from an unnamed regional organisation.
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