Every year, AsianInvestor's editorial team conduct an intensive analysis of the region's leading asset management service providers, fund products and asset managers, to ascertain the top organisations of the previous 12 months.
The winners of these categories must combine a mixture of business performance, growth and progress, measured on both quantitative and qualitative criteria.
Below, we detail why we chose winners for the second section of our marquee awards, which comprise the leading alternative asset managers for real estate, private equity and hedge funds, as well as our top institutional product or strategy and our leading institutional solutions provider.
BEST ASIA REAL ESTATE MANAGER
2018 was a year when the appeal of logistics assets was cement among commercial real estate investors, due to its relatively high need for modern supply combined with strong fundamentals especially stemming from the surge of e-commerce.
Nowhere was that demand more prevalent than for the business of global logistics specialist GLP. After the company was finally taken private, in the city state's largest merger and acquisition deal, in January 2018. During the rest of the year the company enjoyed a massive growth spurt, with its assets under management (AUM) increasing by $20 billion to hit $64 billion by the end of the year, including unrealised commitments.
Among GLP's key drivers was its establishment of the ¥625 billion ($5.6 billion) GLP JDP III, the largest ever Japan-focused logistics private real estate fund, which welcomed several new global investors. Another highlight was the closing of the third European venture within a year of market entry, bringing GLP’s AUM in Europe to over €6 billion ($6.69 billion).
GLP also entered the India market by forming a strategic partnership with theindustrial real estate company peer IndoSpace with an AUM platform of $2 billion. This included a domestic record $1.2 billion fund that closed in December 2018. GLP China established its first income and private equity funds, with three vehicles totalling around $5.6 billion, including joint ventures with Singapore’s sovereign wealth fund GIC and insurer China Life.
Across the year, GLP doubled its investor base, welcomed new institutional investors from North America, Europe and Asia. More than 99.9% of the fund manager’s investor base are institutional investors, and over 60% of them investing across multiple funds. That's a strong indication of the extent of its appeal.
BEST ASIA PRIVATE EQUITY MANAGER
Baring Private Equity Asia
Baring Private Equity Asia (BPEA) saw a busy year with raising primarily institutional capital for the seventh fund in its private equity series – a process that was still ongoing by the end of 2018.
With a reportedly first close in July 2018 of $4.5 billion, the fund size already exceeds the sixth fund in the series that raised $4 billion, and is understood to have reached its target of $5.5 billion with the possibility to raise further capital before its final closing. Among the 60 institutional investors in the first close was reportedly Canada Pension Plan Investment Board and Teacher Retirement System of Texas.
In terms of performance, BPEA in January made a noteworthy exit of Korean Halla Cement, with a sale of the cement business to likewise Korean Asia Cement for a total enterprise value of $723 million. The sale reportedly generated a total return of 2.4 times the investment capital and a gross internal rate of return (IRR) of 71% in under two years.
Formerly known as Lafarge Halla Cement, BPEA invested in the company in April 2016, carving the business out from parent company LafargeHolcim and creating a new standalone business with a fresh corporate identity. BPEA subsequently took full control of Halla Cement in May 2017 and reportedly expanded margins by around 400 basis points and led to a 30% Ebitda increase within a year.
BEST HEDGE FUND MANAGER
Gen2 Partners continued to grow its capabilities in the hedge fund asset class in 2018. Managing more than $1 billion of assets under management (AUM), the overall strategy of the Hong Kong-based firm has been very successful.
The key hedging tools it employs, such as index futures/options, provided enhanced risk-adjusted returns by capturing the growth in Asia and avoided the volatility in the last quarter last year. Using sound analysis to strategically invest in Korea and the Greater China region, the firm actively sought out undervalued opportunities primarily in fixed-income asset class to boost returns.
In terms of performance, standouts include KS Asia Absolute Return fund. The annual returns of the fund – a multi-strategy fund launched in 2010 – outperformed both Eurekahedge Asia/Japan Hedge Fund Index and MSCI AC Asia Pacific US dollar by a double-digit margin.
Gen2 Partners also offers a Korea-focused fund, KS Korea Credit Fund, garnering high single digit of annual returns and significantly beating its designated benchmarks, such as Korea Bond Index 120.
Incorporated in 2008, Gen2 Partners is an independent alternative asset management firm in Asia. It has built its hedge fund business with clients such as sovereign pension funds, sovereign banks and family offices in the region.
BEST INSTITUTIONAL PRODUCT/STRATEGY
AXA WF Global Factors – Sustainable Equity fund
The sustainable equity fund of Axa Investment Managers stood the test of a particularly difficult year. The factor-based fund focuses on low volatility and quality to pick its basket of stocks while incorporating environmental, social and governance (ESG) integration as part of its investment strategy.
In essence, the fund is designed to to identify companies that look like good long term investing bets, and which seek to improve their governance, social responsibilities or environmental needs. The idea is that such companies' stock valuations will stand out over the longer term. AXA created the strategy to try and protect investors from the worst of market downturns, while possessing less overall volatility and around 47% less of a carbon footprint than its benchmark, the MSCI World Index.
The strategy is very well regarded; fund research company Morningstar ranks it as a five-star fund. And, in addition, it has performed better than its MSCI benchmark over one, three and five years. During each of these it also recorded a high Sharpe ratio, demonstrating its ability to find returns without taking excessive risk.
The fund has impressed many backers, including one of the US's largest pension funds, which assigned $1 billion to the fund. Its mandate, which uses the fund as its basis, its actively managed, with Axa seeking to identify not just what are quantitatively quality stocks today, but which ones will be increasingly seen as high quality in the future and assigning more weighting to them.
The proof of the fund's strength has been in its performance. Like many equity funds, the strategy fell into negative territory in 2018, falling by 4.2%. However, that was still a better performance than the MSCI World Index, which dropped by 8.2%. And over three and five years, the Global Factors fund reported 7.83% and 6.82% returns, respectively, versus 6.91% and 5.14% returns for its benchmark. Meanwhile its volatility for each year was well over a percentage point lower than for its index over each time period.
For investors keen on a cheap, appealing way to invest that outperforms typical equities and has a decent ESG focus too. Axa's strategy has offered an appealing option.
INSTITUTIONAL SOLUTIONS PROVIDER
During a taxing year Amundi managed to stand out for its ability to rein in more institutional investor mandates in the region.
Despite most equity and fixed income asset classes dropping over the course of the entire year, the asset manager managed to build its regional institutional assets under management to $236.6 billion at the end of 2018, up from $227.2 billion at the close of the previous year. With 70% of its global AUM being sourced from institutional investors, the fund house enjoys a strong asset owner presence globally and in Asia.
Despite the difficulties of last year, the French fund house continued to add another $5 billion in asset owner mandates during the course of 2018 from a selection of north Asian clients. Examples of this included mandates from two major greater China pension funds, as well as Amundi being appointed by a sovereign wealth fund in the region near the end of the year to conduct an environmental, social and governance-based strategy worth several hundred million dollars.
In addition to this the fund manager gained an investment mandate from a supranational bank based in the region, creating a bespoke dollar and hedged euro-denominated asset portfolio. Plus it was appointed by a Korean bank to build a bespoke floating rate note and US corporate credit purchasing portfolio, that also utilised an interest rate swap to ensure a stable spread target over Libor.
On the insurance side Amundi had some success as well. It came up with a fixed income investment product for a Chinese insurer that offered a strong and stable investment return, while mitigating market risk in line with the implications of International Financial Reporting Standards 9 and 17. That offered it a welcome product to best navigate the future impact of these accounting regulations.
Amundi has also made pains to engage with the region's leading investors. This has included a two-week in-house training programme for clients, which the fund house conducts in Paris, which covers the fundamentals of investment and risk management. It has a team of 20 staff that are dedicated to analysing and implementing any new client request in the fund manager's systems.
Article updated to clarify Gen2 Partners' assets under management.