Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
The new fund management business will be based in Shanghai, where an agreement was signed by Nick Alford, MorleyÆs chief operating officer and CofcoÆs chief financial offier Wu Gaoning. MorleyÆs chief exuecutive Alain Dromer and the chairman of Cofco Ning Xiaohui were also present in the opening ceremony on October 31.
Outside of CofcoÆs traditional business in food, which dates back to 1951, the group is also active in insurance, real estate and futures brokerage in China. In 2003, it formed a life insurance joint venture with Aviva in a 50-50 arrangement. Aviva-Cofco now operates in 21 cities across China, and is the fourth largest foreign life insurer out the 25 foreign joint ventures present in the country.
Dromer says the new JV will be a key platform to seize the opportunities provided by ChinaÆs high economic growth, liberalizing policies, and rapid growth of the Chinese asset management sector. He estimates that fund houses in China now manage $440 billion, and that number will increase dramatically over the coming decade.
Walter Lin, head of strategic development in China, will be in charge of further broadening MorleyÆs presence in the country. Alford says the company will apply for both the QFII and QDII licenses in the future, noting that Morley has lofty plans to expand its foothold in China investments over the next 12 months.
In Asia, Morley has been rapidly expanding in the property sector, where an initial $2 billion has been raised for real estate investments. That amount will be raised to $10 billion by 2011. As of June this year, $430 million was already invested. At present, Morley is setting up a number of property investment JVs in Japan, China, South Korea and India. The first JV was announced with Mitsubishi UFJ Trust and Banking in Japan in April.
As of the latest quarter, Morley booked a total profit of $87.37 million, up 31.25% from $66.57 million in the same period in 2006. Outside of the UK, it operates in Australia, Ireland, Luxembourg, North America and Poland, where it manages $349.5 billion in assets from the Aviva group and its third-party clients. Currently, its core assets classes include pan-European equities, fixed income and property assets.
MorleyÆs parent company, Aviva continues to expand in Asia by increasing its partnerships presence. In Hong Kong and Singapore, it has affiliation with the DBS Group. Recently in Taiwan, it signed another joint venture agreement with the islandÆs second largest financial group First Commercial. The Taiwan venture will begin operation in 2008 subject to regulatory approval.
Regulators keep their eyes open on tightening insurance industry by introducing more detailed risk management requirements, which could bring pressure on smaller players.
China and India are more obvious choices for AustralianSuper to consider in Asia Pacific, but the super fund currently lacks the expertise and prefers to stick to the US and Europe.
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Investors are increasingly turning to private companies and private debt in their hunt for ESG alpha, but the age-old problem of transparency and due diligence remains