Edmond de Rothschild Asset Management aims to boost its AUM by 36% over the next three years, and is seeking an Asian partner to help spearhead these efforts.
The French firm wants the partner to assist it in expanding its regional distribution platform and asset management capabilities. Ultimately it aims to boost the AM division’s €55 billion ($75 billion) in assets (as of June 30), by €20 billion by 2016, says Laurent Tignard, global chief executive of asset management.
EdR AM is speaking to potential partners in Korea and Singapore, he says, but declines to be specific as to a likely timeline.
The firm partnered with Nikko Cordial Securities in 2006, with the Tokyo-based firm selling EdR AM’s funds to Japanese high-net-worth individuals. He declined to say how much Japanese money the firm has raised since the partnership.
While EdR AM seeks “a partner to deliver funds locally”, Tignard says the firm will also look to increase its AUM by adding to its internal sales team and through its own distribution platform within the private bank.
Denis LeFranc oversees the firm’s Asia business development efforts out of Hong Kong. Including LeFranc, EdR has two business development staff in Hong Kong, one in China and one in Taiwan, and will seek to expand its headcount as AUM grows in upcoming months.
As well as seeking a new partner to expand its AUM, EdR AM is also planning to raise more funds from its existing relationships with institutional investors, private banks and other distributors.
A significant portion of the new money is likely to be sourced from Europe, although Tignard says the firm is in talks with institutional investors in Hong Kong, Japan, Korea, Singapore and Taiwan.
Tignard is also helping EdR restructure its business. Previously, the firm’s global operations were run “more like silos”; now its private banking and asset management divisions will work more closely in tandem.
“There was very little overlap before, it was much more specialised,” he says. “Now we are one global group, connected through our asset management business and our private banking business.”
(Tignard joined EdR in April from HSBC Global Asset Management. Before that, Philippe Couvrecelle oversaw the asset management group from May 2007 to July 2012.)
Meanwhile, Tignard says the firm is seeing more interest from Asia-based investors seeking opportunities in Europe than from European investors looking to invest in Asia.
While Europe is ripe with opportunities, looming regulations such as Basel III pose significant challenges for both asset owners and managers. Tignard says regulatory constraints will have an impact on asset managers’ clients and will require firms like EdR to be more innovative with their offerings. “It’s something we’re working on,” Tignard says.
Basel III, for example, has created opportunities. It requires banks to hold a portion of their balance sheets in easy-to-sell assets such as bonds, which has led insurance companies to increase allocations to long-maturity debt.
These regulations have handcuffed banks’ ability to lend at a time when a number of developing economies’ are in need of investment.
As such, these regulations have opened the door for asset management firms to launch funds that provide the long-term financing needed for some of these projects, which include highways, prisons, schools and bridges.
“These are 20-year infrastructure products [and as such, give] institutional investors long-term access to bonds,” Tignard says.
The firm plans to roll out a Luxembourg-domiciled fund at the start of next year that will invest in equities and corporate debt, he adds.
Investors will be able to take a seat on the board of the fund’s underlying companies. “When you’re sitting on the board of a long-term holding [company], that’s very effective for insurance companies,” he says.
Tignard declined to offer more detail on the fund.