Fidelity is considering opening its first offices in Thailand, Malaysia and Indonesia as it looks to expand its business in Asian markets.
The asset manager said it was assessing the prospects of offices in the countries, and a favourable decision could see openings within two years.
While Fidelity already has clients in the countries, its Southeast Asia head sees a potential need to have a physical presence, partly in order to grow the institutional side of the business.
Mike Nikou, Fidelity Worldwide Investment’s managing director for Southeast Asia, relocated to Singapore in July 2013 to take up his current position. He was previously Fidelity’s managing director for northern and southern Europe and Latin America.
One of the reasons Fidelity appointed Nikou to his current post, he said, was to develop the Southeast Asia region outside of Singapore.
Fidelity currently has Asia offices in Singapore, Hong Kong, Korea, Taiwan, China, Japan and Australia. Hong Kong is Fidelity’s Asia hub, and along with Singapore provides support roles to many of the other regional offices.
“We’ve had an approach in the past of going after low-hanging fruit outside Singapore, such as in Malaysia, Thailand, and the Philippines,” Nikou told AsianInvestor. “What we’ve done now is spend a lot of time meeting with regulators in individual countries in Asia outside Singapore, meeting with distributors and potential partners.”
He said that Fidelity was enjoying ‘good strong business’ in Thailand and was seeing a high demand for funds. Given that the funds were sold through a master-feeder structure, Nikou said there was not a need right now for a local office since the sales could be managed from Singapore.
But he said: “In the foreseeable future I think there will be a need to probably set up a small office in Thailand.”
Nikou said Fidelity was also assessing the prospects for a Malaysia office to drive the institutional side of the business.
He explained: “If we want to do a lot more on the institutional side there’s an expectation to have an office in Malaysia and that’s what we’re assessing right now. So we’re [looking at] what is the opportunity cost of setting up an office in Kuala Lumpur.“
Nikou said that Fidelity would be able to make a decision on whether to open Malaysian and Thai offices within the next 6-12 months; in the event of a positive decision, it would take an additional 12 months to open an office.
An Indonesia office was a longer-term prospect, however. Nikou said he had been meeting regulators, large banks and insurance companies in Indonesia, and he was enthusiastic about the country’s prospects, including the ongoing liberalisation of regulations.
He said: “I think it’s a fantastic opportunity that we’ll see in Indonesia. It’s the fourth-largest country in the world and the middle class has seen strong growth; average GDP is increasing. I think that market in the next 10, 15, 20 years is going to be really exciting. In the short term we’re still contemplating the approach we want to have into Indonesia. It's still early, but at some point we will definitely need to think about opening an office there.”
Regarding the composition of staff in new offices, if they were created, Nikou said they would initially be composed of a small number of front-facing investment professionals. He cited his experience of creating an office in Sao Paulo, Brazil, which opened with two employees.
In comparison, Fidelity's Singapore office has 60 employees, 36 of whom are investment staff; the Hong Kong office has about 450 employees, of which 98 are investment staff.
Nikou said Fidelity’s approach with new offices was to start with a small team, build up local interest and assets and then expand the team to support that business. He said that in the event of new Asia offices, support and infrastructure would initially be provided by the Singapore branch until the new operations could stand on their own two feet.
He stressed that Fidelity was not arriving late in these markets: “It’s still early, and when Fidelity goes into the market we go in for the long term so we’re not a firm that’s going to go in and out of a market - we take a decision and it’s a long-term investment for us. That being said, we do a lot of work in assessing a market before we take that decision. There’s no concrete plans on any of those countries to launch offices, but I can assure you we’re assessing it.”