Future unclear for Asian operations of SGAM, CAAM
It has been a few days since the announcement of a merger between the asset management businesses of Societe Generale and Credit Agricole, but the fate of the Asian operations of the two French fund houses is still unclear.
A spokeswoman for Credit Agricole Asset Management (CAAM) in Hong Kong says "working groups are in the process of being set up" to deal with the details of the merger. It is premature to answer questions regarding the impact of the merger on the Asian operations of both fund houses, she says.
As previously reported by AsianInvestor, the merger combines the entirety of CAAM with the European and Asian businesses of SG Asset Management (SGAM) as well as 20% of TCW, a US-based fund manager. Together, the new entity, which has yet to be named, will be responsible for around €638 billion ($836 billion) in assets under management as of September 30, making it the ninth largest asset management company in the world.
Credit Agricole will own 70% of the new entity and SG 30%. Credit Agricole will appoint the chairman and two-thirds of the directors of the board. Yves Perrier, currently CEO at CAAM, will become CEO of the new entity. The vice-chairman will be appointed by Societe Generale. Both partners have a five-year lock-up but will consider a stock listing after that point.
AsianInvestor has posed questions to both CAAM and SGAM about the impact of the merger on their respective partnerships and joint ventures in Asia.
A spokeswoman for SGAM in Paris says it is too early to respond to detailed questions, because their partners have not yet been fully briefed.
"We have informed our Asian partners (about the merger) and we will see them in the coming days," she says.
CAAM has fund joint ventures in China and Korea, with Agricultural Bank of China and the National Agricultural Cooperative Federation (Nonghyup), respectively, and as of early-January, was in the process of looking to create a similar structure in India. The region is run by Asia CEO Thierry Mequillet.
SGAM, meanwhile, has an older, more established China JV with Baosteel called Fortune SGAM Asset Management, whose CEO Denis Lefranc was promoted to run SGAM Asia-Pacific last year. SG also has a successful JV in Korea with the Industrial Bank of Korea and a large business in Japan from a partnership with Yamaichi Securities. As at the end of 2007, SGAM had over 800 employees in the region.
It is unclear how the overlapping of products, scope of business, and client network of the two firms will be resolved.
Both fund houses also declined to comment on the possible impact of the merger on the headcount in the region.
As at September, CAAM had around €460 billion in assets under management worldwide with a staff of 2,272.
In Asia, CAAM Hong Kong was set up in 1982 while CAAM Singapore was set up in 1989. The Singapore office is one of CAAM Group's eight global investment centres worldwide. The investment team consists of both Asian equity and global and Asian fixed income specialists.
CAAM's strategy has been to leverage its roots in France as an agricultural cooperative to forge relationships with similar financial groups in China and Korea. In China, the funds joint venture with ABC is now seven months old and manages around Rmb10 billion ($1.5 billion) in two funds.
Nonghyup has meanwhile gone through a modernisation process, with the government replacing older management with a new generation of leaders and introducing merit-based compensation. This has created a more dynamic partner that can help the funds JV with CAAM continue to win business from Korea's biggest institutional investors, such as Korea Investment Corporation and the National Pension Service, which will continue to outsource.
As of September 30, SGAM had around €298 billion in assets under management worldwide and more than 3,000 employees.
In Asia, SG Asset Management (Singapore) serves as its management centre for Asia-Pacific ex-Japan equities. The investment team is headed by CIO Winson Fong, who has more than 20 years of investment experience. The office also plays a hub role for administrative support to other distribution centres, such as Hong Kong and Australia. SG Asset Management (Hong Kong) plays a key role in sales and marketing. SGAM Japan, which has around 190 employees, is run by president and CIO Masato Degawa.
Fortune SGAM Fund Management, meanwhile, was set up in 2003 as one of the first joint venture fund management companies in China.