US-based MetLife Investment Management (MIM) has applied for a licence and plans to hire sales staff in Hong Kong, and is mulling similar moves in South Korea, with the aim of quintupling its client assets in Asia by 2020, AsianInvestor can reveal.

MIM, the asset management arm of New York-based insurer MetLife, started marketing to institutions in Asia in 2014 and has since won $2 billion worth of mandates in the region, said chief investment officer Steve Goulart. Most of this money has come from Japanese investors and insurance firms in South Korea.

It is at an advanced stage of pitching for a further $3 billion in portfolios from Asian clients and aims to manage $10 billion sourced from the region within the next three years, he told AsianInvestor.

Goulart expects MIM to see faster growth in Asia than elsewhere. “Our own [general account] assets are also growing faster in Asia than in the US, although that won’t double,” he noted. “I think we will continue to see high-single-digit or maybe low-double-digit growth.”

A licence from Hong Kong's Securities and Futures Commission would allow MIM to put staff on the ground there, and it intends to appoint a senior sales executive and a support individual.

MetLife has already hired its first two salespeople in Tokyo this year, having obtained a licence there in April last year. Maya Kiyokawa joined MetLife Asset Management in January to lead business development in Japan. She previously worked in alternative product sales for cross-border fund marketing firm Teneo Partners. Kiyokawa is supported by Arisa Yamanaka, an internal transfer. 

  Steve Goulart

MIM does not have a licence or salespeople in Seoul; it serves Korean clients from the US. “Because of the success we’re having there, we would like to put people on the ground at some point,” noted Goulart.

China is also a market that MIM is keeping a close eye on, he added. While it has no immediate plans to seek a licence or put personnel there, he said, it remains open to exploring ways to penetrate the market. 

Chinese insurers can now invest up to 15% of their assets overseas, but currently only have a low-single-digit allocation. Large players such as China Life and Ping An are keen to increase their offshore exposure, particularly in the alternatives space.

Specialist assets

MIM’s Asian clients to date have mostly been insurers handing it mandates across specialist alternative strategies, such as commercial mortgages and loans, corporate private placements and infrastructure debt.

MetLife has invested in such assets for years, said Goulart. “Private placements and commercial mortgages account for 15% to 20% of our general account. To us these are mainstream assets, although they are generally privately originated.”

When making such investments, the insurer has typically sought to achieve a return of at least 25 to 100 basis points over comparable public instruments such as public mortgage bonds. But Goulart admitted that this is becoming harder as money pours into illiquid credit and real estate.

“There is no question we have seen spreads tighten across all asset sectors,” he noted. “There is a chase for yield and everything has come down. And when I’ve attended a number of forums, when I speak to other CIOs everyone feels the same way. In every sector fixed income is continuing to attract capital, and that continues to drive spreads lower.”

Increasingly, Asian asset owners are asking Metlife about co-investing opportunities, Goulart said, declining to specify exactly how much he has done.

“We started the business by saying we will co-invest, and we do so sometimes. We have done this with some Asian asset owners. Investors get comfort from the fact we have invested or would invest in that asset. There’s no question it helps.”

MIM leverages the expertise of the in-house investment team that manages MetLife’s general account assets and its related operational infrastructure. The insurer has some 800 investment professionals worldwide, of which 125 are based in Asia (with 27 in its regional office in Hong Kong). MetLife’s AUM in Asia is around $100 billion (around 20% of its $485 billion globally), of which some 90% comes from its Japanese business.