Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
Korea remains the largest market the firm has yet to touch, says Neil Cochrane, deputy CEO and global head of business development in Sydney. Nor does it have a presence yet in Malaysia. Although Cochrane would not go into detail about the firmÆs intentions, the firm will start by marketing its offshore product expertise.
ôWe have global investment solutions teams in Australia and the UK,ö Cochrane explains. Recent success stories include Asia property funds, which have raised strong figures in their retail form, as well as China equities, natural resources (with a strong China and emerging markets theme) and balanced products. It plans to introduce a global Reit fund currently on offer in Singapore to Hong Kong in the coming year.
First State has gone through a number of new initiatives over the past two years. The joint venture with Cinda Asset Management in Beijing, sealed under the departed Stephen Kenneally (now at Cohen & Steers), launched its debut fund earlier this year.
ôOur first fund closed in two hours with RMB8.3 billion and 189,000 customer accounts,ö says Lindsay Mann, First StateÆs Singapore-based Asia-Pacific CEO. Since then the AUM has risen to $14.3 billion, thanks in equal parts to capital gains and further subscription inflows.
It has signed First Global Investment Trust, a Taiwanese asset manager, to serve as its master agent (sole appointed distributor) for that market. Regulations requiring a certain track record mean that so far First State hasnÆt been able to register its best products in Taiwan, but over the course of this year several of its more attractive ones will become eligible, including funds investing in global resources and global and Asia real estate.
Although the firm is looking to grow in AsiaÆs bigger markets, itÆs been Hong Kong which has driven much of its growth over the past two years. Five years ago, the firm had A$3 billion under management. Today itÆs approaching A$10 billion, and Hong Kong has played a key role. ôIn Hong Kong weÆve grown at twice the pace of the industry average,ö Mann notes. The firmÆs total business is half retail and half institutional, although the retail side is growing more quickly.
The firm has onshore businesses in Singapore, Hong Kong, China and Indonesia (thanks to the strong Jakarta presence of parent Commonwealth Bank), as well as Japan. The one major market it is not targeting with offshore products at this time is India. The firm would rather concentrate resources on building the China and Indonesia franchises.
Beyond the nuts and bolts of expanding the business, Cochrane says he is particularly proud of First StateÆs participation in a recent United Nations initiative in which companies agree to principles of responsible investment. This includes investments deemed sustainable in an environmental, social or governance context.
ôWe have agreed to make these driving factors in our research and how we question companies,ö Cochrane explains. ôAs investors we already require quality in companies and reporting on these standards. ItÆs not an SRI-style negative screen but measures that should enhance company performance.ö
He adds that many of First StateÆs larger institutional clients in Australia and Britain have supported such an approach. Australian rivals AMP and BT have also signed up to the UN program, Cochrane notes, as have many Aussie superannuation funds.
Not only does this commit the firm to favouring investee companies that are taking steps in the right direction, but to look at its own behaviour. ôWeÆre looking at our companyÆs carbon footprint,ö Cochrane says, ôincluding things such as travel and leaving TV monitors on in the office.ö
He acknowledges that most investors in Asia donÆt rate this as a priority; performance is pretty much all that counts. ôIt may not be a selling point but nor is it a hindrance,ö he says.
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