Italian asset manager Eurizon Capital is seeking to build its presence in Hong Kong by applying for an asset management licence there as a base to sell volatility-conscious multi-asset product in Asia.
The firm, chiefly a fixed income house with €228 billion ($282 billion) in assets that has been striving to diversify, operates a commercial branch in Hong Kong.
This branch was set up in 2012 and houses two business development professionals at present. But Tommaso Corcos, chief executive and general manager based in Milan, told AsianInvestor it is aiming to transform its Hong Kong business. It plans to apply for type 4 (advising on securities) and type 9 (asset management) licences from the city’s Securities and Futures Commission.
“We are ready for the process; the idea is to finalise everything in the first half of next year,” he said.
Eurizon Capital has had a 49% stake in Penghua Fund Management in mainland China since 2009 alongside Guosen Securities, which owns a 50% share. The joint venture has Rmb174 billion ($28 billion) in AUM.
And Corcos noted: “Hong Kong is a very important gate for us to leverage our presence in China and to reach out to other Asian countries such as Taiwan and Japan.”
He said the business plan was to house about 15 staff in Hong Kong within the first 18 months, including investment management and marketing professionals.
Initially it will target institutional investors with its range of solutions domiciled in Italy and Luxembourg, which include multi-asset and multi-product portfolios with a range of different volatility targets, limited tracking error products and quantitatively managed structured products.
Corcos said Eurizon Capital had seen net inflows of €23 billion this year, driven by its volatility-conscious multi-asset range amid a recognition by Italians of the need to have diversified risk with lower volatility. Its aim is to replicate this success in Asia.
Eurizon wants to provide multi-asset products to customers in China. “We think their needs are transforming,” he observed. “They started with domestic product and now they are looking for more diversified solutions.
“We want to bring the expertise we have in Luxembourg and leverage our experience with Penghua Fund Management. We want to create multi-asset products for Chinese and Asian customers.”
While Eurizon Capital’s initial plan is to distribute its Luxembourg range, Corcos noted that in a second phase it wanted to establish Hong Kong-domiciled product, with one eye on taking advantage of the Hong Kong-China mutual recognition scheme.
“We would love to have internal expertise [based in Hong Kong] for managing Chinese equities, bonds and balanced products and then have a small team in charge of managing our multi-asset platform,” added Corcos.
Eurizon Capital is the asset management company of Intesa Sanpaolo Group and has a market share of 15.4%. Of the money it manages, 43% is for institutional mandates, 42% for mutual funds and 15% for retail managed accounts.
By asset class, it has 44.1% in flexible (dynamic) solutions, 33.4% in fixed income, 9.4% in equity, 9.4% in money-market funds, 3.5% in balanced product and 0.2% in hedge funds.