Asia continues to lag other regions for integrating ESG principles with investing; better data and stronger regulatory requirements will help institutional investors, market observers say.
Market sources report the firm is about to market its first Asia-specific investment products, privately placing a Greater China equity and an India real-estate fund. Lehman Brothers would not comment on any product or confirm it is in the process of marketing Asia-specific ones, but it was willing to talk about the steps it is taking to bolster its regional investment capabilities.
It has recently hired Frank Yao to run a team that will manage Greater China equities. Yao is the former CIO at Shanghai-based Huaan Fund Management. Two years ago, Huaan selected Lehman to sub-advise its launch of ChinaÆs debut QDII mutual fund. When last year Yao left Huaan with plans to manage his own private funds, Lehman's Bradley Okita, Hong Kong-based managing director, who had worked with Yao on the QDII product, convinced him to join the firm.
Now Yao oversees a nine-strong investment team, with research analysts in Shanghai and portfolio managers in Hong Kong; eight are mainland Chinese, one is from Hong Kong. On board since January, the team now manages a Greater China equities fund that has been partly seeded by Lehman Brothers.
The China team represents Lehman's decision to put resources behind this particular asset class, which it views as the sort of thing that will be important to investors for decades. Over time it wants to be able to offer the full range of investment styles and strategies in Chinese securities, including credit and hedge strategies, as regulations and capital markets permit.
Similarly, the firm has built investment capabilities in India. Two years ago the firm had no investment-management presence there. It now has front- and back-office staff there, including over 10 people in its private-equity team. It is looking to create products in local real estate, infrastructure and corporate opportunities.
Chris Manning, head of the investment-management division for Asia-Pacific, says investment management is one of four core businesses for the firm, along with fixed-income capital markets, equity capital markets and investment banking.
Within investment management are three units: asset management, private equity (run directly by Manning) and high-net-worth distribution, although the firm has yet to make this last one a significant business in Asia. Manning, who moved to Hong Kong last year from New York, says because the firm has only had a presence in Europe for four years, and in Asia for two, it has been able to build a business from scratch that aims to avoid some of the structural defects common in other firms. For example, it tries to share information and clients with the capital-market and investment-banking departments.
For the most part, its investment professionals worldwide, including Hong Kong, Singapore, Tokyo and Sydney, offer global products for a global clientele, but the firm wants to be able to cater to specific client demands in Asian products. And it wants to put resources into selected areas in the region which it thinks will be critical asset classes over the long run.
It has also just received licenses from Hong KongÆs Securities and Futures Commission to market products to Hong Kong investors. The firm recently registered a family of Ucits funds in Dublin, 14 of which are now authorised for sale in Hong Kong. The firm is now in the process of trying to partner with local distributors.
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