LGT Bank plans private equity roll-out in Asia

Liechtenstein’s LGT Bank is looking to offer dedicated private equity investment opportunities to its clients in Asia, AsianInvestor can confirm.

Part of the Liechtenstein royal family-owned private banking and asset management business LGT Group, the private bank said it was still at an initial stage of exploration.

The group's asset management unit, LGT Capital Partners, will perform due diligence on the universe of PE managers. All types of PE will be explored, including early-stage venture capital, secondary offerings and distressed debt.

Due diligence on funds and managers typically takes 3-6 months, and LGT Bank has not yet set a date for implementation.

LGT Bank presently offers traditional funds, exchange traded funds and fund-of-hedge-funds on its open architecture platform in Asia. At present it offers exposure to private equity through its Princely Portfolio, a globally diversified portfolio managed by LGT Capital Partners using an external manager approach.

The portfolio has an 18% allocation to PE, which performed strongly last year, contributing an 11.2% return and surpassing the returns from hedge funds, global bonds and equity investments.

But now it is planning to offer dedicated PE exposure through LGT Capital Partners to both its discretionary and advisory clients in Asia. LGT Capital Partners manages more than $50 billion for over 400 institutional clients in alternative investments, of which $23 billion is in private equity.

"We believe that global investors are paying a premium for liquidity, so there may be better value in illiquid assets such as private equity,” said Hong Kong-based Stephen Corry, chief investment strategist at LGT Bank, the group’s private bank.

“Admittedly, the lock-up period could be 10 years or more, but because of private equity's illiquid nature, investors are more often than not compensated with higher returns over the long run."

Corry listed "strong returns" was one key reason why investors were considering PE. He added that while they preferred liquid assets, they were receptive to illiquid investments if they were part of a liquid portfolio. 

On a separate note, Corry said the bank’s discretionary business was continuing to grow strongly as a result of market uncertainty.

“Due to the increased acceptance of social media, there is more market noise," he said. "Clients find they are unable to stay on top of all the information. They would therefore rather have a professional manage their capital for them instead. As a result, our portfolio discretionary business has grown very steadily in recent years."

He stated that LGT Bank’s discretionary business had grown from 10% to 20% of total business within five years. The bank has $19.5 billion in assets under administration. Corry said he expected the figure as a share of AUM to rise, given recent annual growth rates.

LGT is the world’s largest private banking and asset management group to operate as a family business. Owned by the Princely House of Liechtenstein for more than 80 years, it has been operating in Asia for nearly 30 years. It employs 250 people in the region, with two booking centres in Asia (Hong Kong and Singapore) and two in Europe (Liechtenstein and Switzerland).