With the industry still digesting the shock exit of three of Eastspring Investments’ top executives, the fund house this month laid off four alternative investment staff, citing a “challenging market backdrop”.
The departures, part of a broader headcount reduction, include head of private equity Alex Hambly and Duncan Black, an investment director covering infrastructure, multiple sources familiar with Eastspring told AsianInvestor.
There are understood to have been other cuts, including two members of the team looking after the relationship with Eastspring’s biggest client – parent insurance firm Prudential Corporation Asia. PCA accounts for about half of Eastspring's $193 billion under management.
The layoffs have come shortly before Eastspring’s new chief executive, Seck Wai Kwong, is due to take up his post in mid-April. Sources familiar with the firm said Seck may well ring further changes once he arrives, as is typical for new bosses.
A spokeswoman confirmed to AsianInvestor that Eastspring was reducing the headcount in its alternatives business and would be letting four members of the team go. She declined to confirm the names of any of the departing staff. (See also box below.)
“This decision has not been taken lightly, as all our employees have made a significant contribution to the business,” the spokeswoman said.
REVIEWING ALL AREAS
The firm has been reviewing all areas of its business and “prioritising initiatives to reflect the market environment”, she added. “As a result of this review, some roles are no longer required. These changes reflect what is needed by the business at this time.”
The spokeswoman said Eastspring remained in a strong position relative to its competitors but needed to invest in high-priority initiatives that would drive growth and allow it to reduce costs and capitalise on opportunities.
“Our long-term plan and vision for alternatives remains in place but the realignment of investment resources is necessary at this time,” the spokeswoman said.
Even so, the departures will do little to quell industry talk about the firm after the exit in January of chief executive Guy Strapp, chief financial officer Ted Pull and chief operating officer Phil Stockwell.
The abrupt changes helped revive market speculation over Eastspring’s future, including whether Prudential might look to sell the business – which it has denied is the case.
Of course, Eastspring and Prudential are not alone among asset managers or insurers in facing rising cost pressures.
BlackRock, Legg Mason and State Street have all said this year that they are making layoffs. And other international fund houses pared their headcounts in Asia last year, such as Merian Global Investors (formerly Old Mutual Global Investors) and NN Investment Partners.
As the Eastspring spokeswoman said: “Overall, the market in 2018 was challenging. Across the board, asset management firms are facing rising costs and lower fee revenue.”
One area that has had an impact on costs in the past year or two is Eastspring’s project to outsource and upgrade various functions – including implementing BlackRock’s Aladdin risk management and trading platform – industry experts have said.
Using Aladdin can cost an asset manager between $20 million and $50 million over a five-year period, one consultant told AsianInvestor on condition of anonymity.
The Eastspring spokeswoman said this project, involving the outsourcing of certain functions, was delivered ahead of time and under budget.
“As we have embarked on an upgrade of our systems and processes ... it’s natural that our workforce would evolve to meet the future needs of our organisation,” she added.
Eastspring’s alternatives team had been in place for less than 18 months. It was formed when Duncan Black and Nadir Maruf joined from Daestrum Capital in September 2017, the latter as head of alternatives.
Alex Hambly, most recently head of private equity before he left, was a long-standing Prudential executive. He had joined the UK insurance group in 2003 and held roles such as Singapore CEO executive for Prudential Property Investment Management and Asia CEO and CIO at M&G Real Estate, according to Bloomberg.
Other members of the alternatives team include investment director Glyn Carroll; head of alternatives fund of funds David Emes; portfolio manager for private credit and private equity Marcus Tay; and infrastructure manager Shringar Mascarenhas. These are their positions according to their LinkedIn pages.
AsianInvestor could not ascertain which individuals remain in place.