US asset manager Federated Investors is on the look-out for acquisitions in Asia-Pacific and plans to base fixed income specialists in the region as it steps up efforts to expand globally.
Just last week the Pittsburgh-based firm, which has $356 billion in AUM, announced it had hired Craig Bingham (pictured) as chief executive of its fledging Asian subsidiary. That office is due to open in Melbourne within the next two weeks as a new regional headquarters.
Bingham tells AsianInvestor he has been hired to help determine the best strategy for building a sustainable footprint in the region amid a period of change and challenge for the industry.
The former Asia-Pacific CEO of Aviva, who opted to take a year-long sabbatical once Aviva sold its Australian equities business to nabInvest, is contemplating the right model to adopt.
It was during the Aviva sale that Bingham came across Federated as an interested party. During his year out he maintained contact and eventually officially joined the firm last week.
He points to a structural industry shift that is underway in a period of consolidation among pension funds in Australia that has seen the big players increasingly look to bring investment expertise in-house. This throws up a possible conflict that potentially your biggest clients will become your biggest competitors for talent and human resources
“My view is that some of the traditional models of asset management have been broken and are probably not repairable,” says Bingham. The distribution challenge has become very significant.
“We have to look at the way the needs of clients and the marketplace are changing. It might require a different model and approach to what we have traditionally done.”
He raises the question that if pension funds in Australia and elsewhere are busy insourcing talent, how can external managers serve them without mandates in the market.
It has led Bingham to think about a multi-boutique model as potentially one way to thrive in today’s competitive environment. “Certainly [a multi-boutique structure] is one I am examining with a lot of effort,” he says. “I see some merit in that.”
Asked if Federated is considering acquisitions, he replied: “I know the group has looked at acquiring. But equally if we can find the right individuals and teams that need a new home, we have been looking at those as well. So probably it will be a mixture of both [an organic and inorganic approach].
“The mandate I have been given is to begin the process of increasing the international exposure of the firm and getting more global impact coming through the organisation,” he adds. “We want to continue to build on the very strong business we have in the United States.”
Bingham confirms he is potentially looking to hire three or four institutional salespeople across the region to promote the Federated brand and product range, which is strongest in fixed income.
Thereafter he will explore the possibility of establishing manufacturing capabilities in the region, most likely in Singapore or Hong Kong. He wants this fully up and running within two years.
He notes that Asian and emerging market debt is an area where Federated sees potential to add exposure to its existing suite as well as manufacturing new product, with the US firm currently in the process of adding analysts across the globe to improve its coverage.
“We have to make sure we have enough people on the ground to make informed decisions,” says Bingham. “We are looking for people interested in working with Federated in [fixed income] in Asia.
“Depending on the candidate we will determine where we will base them initially, then we will put more structure around it as we intend to expand out in the region.”
When AsianInvestor interviewed Bingham in August last year he said he planned to take some time out to do some of the things he had not been able to do for the past decade.
He now reveals he has fulfilled one of his ambitions by cycling around Italy and France and “enjoying the fruits of the countryside”. He has also been pursuing the goal of getting a private pilot’s licence and reckons he is half way there. “The intention is to fly around Victoria,” he says.