The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
Investment Partners is the distribution and administrative superstructure over a range of investment groups within the BNP Paribas family, which fancies itself as a band of independently run boutique investment shops. It is the job of Vincent Camerlynck, global head of business development in London, to create distribution and sales opportunities for them around the world. Today he says Asia and the Middle East are where he is focusing the most attention.
Last year he created a new division dedicated to building business in Asia-Pacific, which has become operational in 2008, and has the aim of increasing assets sourced by 50% over the next three years (the firm today manages about $50 billion for Asia-based clients, out of a total AUM of Ç327 billion, or $462 billion). Given the firm already has most of the offices or local joint ventures it requires, growth must now be derived from expanding its suite of local and regional products, as well as tailoring more global products for Asian tastes.
Islamic investments have become a central part of this strategy. BNP Paribas has long had a presence in Bahrain, which it is now expanding quickly. It has recently become one of five global fund managers to win a license to conduct onshore institutional business in Malaysia. In partnership with Bursa Malaysia, it has launched the country's first Islamic exchange-traded fund.
BNP Paribas is using its Malaysia presence to build a local business, but also to serve as the link to the Middle East and global Islamic investing. The firm is now applying to Malaysian authorities for a license to conduct domestic Islamic business, as it already does in Bahrain. ôWe see this as a bridge, to help develop an Islamic investment business in Malaysia, to make products for the region and for Middle Eastern investors,ö Camerlynck says.
The office in Bahrain, on the other hand, does not have a manufacturing component; it is geared mainly to sales and client service. But now a new joint venture with Saudi Arabia Investment Bank (SAIB) is changing the landscape.
The JV, just completed with the Riyadh-based bank, involves spinning off SAIB's asset management group into a structure that will benefit from BNP Paribas' capital and industry knowledge. The new group, to be called BNP Paribas SAIB Asset Management, will first manufacture products that can be sold via SAIB's local network. Secondly, it will repackage BNP Paribas' global products û notably its Malaysia-based Islamic ones û within a local wrapper, also for sale through the SAIB channel.
Thirdly, by taking a stake in a Saudi-based asset manager, BNP Paribas now has the ability to create products for an international clientele that provides full Gulf access. Currently, only investment companies based in the Gulf Cooperation Council (GCC), six Gulf nations that include Saudi Arabia, can access Saudi or Kuwaiti securities. And only Saudi institutions can fully invest across the local market (financial stocks, for example, remain closed even to other GCC investors).
BNP Paribas therefore is planning to add GCC products to existing ranges under its Parvest brand, a Ç22 billion ($31 billion) series of Sicav funds. Asia and Europe will be the main targets, and the firm is already setting up a distribution arrangement with Nomura Securities for the Japanese market.
ôWith businesses in both Saudi Arabia and Malaysia, we can provide a broader range of Islamic investment products, such as tactical asset allocation, bonds and ETFs,ö says Camerlynck. His job is to create the links, to cooperate with different sharia boards, and package and cross-sell products as regulations allow.
He is also tasked with encouraging members of the group to adjust products in their areas of expertise to include sharia-compliant products, and to share in the various cross-selling possibilities. These companies include bond house Fisher Francis Trees & Watts, environmental-themed manager Impax, multi-manager FundQuest, FX specialist Overlay Asset Management and EasyETF, a unit of equities firm BNP Paribas Asset Management.
While Camerlynck acknowledges that demand for Islamic products is small in many Asian markets, he expects it to grow. ôWe want to be well established when demand emerges,ö he says.
Mega players Nippon Life and Dai-ichi Life are looking for opportunities in higher-yield single-A US corporate bonds, which offer more appealing yields than stagnant domestic offerings.
The “lower for longer” monetary policy and stimulus packages, coupled with the rolling out of vaccine programmes favorably support real estate investing in the region, with offices and data centres presenting forward-looking opportunities.
As US fixed income default rates rose and yields fell during the pandemic, are Asian bonds, which have had more stable yields through 2020, looking more attractive?
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