As a relatively little-known firm in Asia, US asset manager Neuberger Berman has hired a consultant relations director with the aim of raising its regional profile and strengthening its relationships with consultants.
Christopher Gunns took up the newly created role in Hong Kong on January 4, reporting to Asia chief executive Tony Edwards, who himself joined late last year. The firm has also created a chief operating officer role, which will be filled in February, but it would not disclose the new COO's identity.
"Consultants are becoming an increasingly important part of the business in Asia, especially from an institutional perspective," says Gunns. "They obviously don't play the same gatekeeper role here as they do in developed markets like Australia, Europe and the US, but their presence and influence is growing."
He had worked in institutional sales at ING Investment Management in Hong Kong, but was fired in November 2008 along with around a dozen others when the Dutch firm downsized in the teeth of the crisis. Since then he had been an independent partner at boutique firm Hong Kong Equity Partners Corporate Finance.
Neuberger Berman's aim is not only to build up relationships with consultants in the region, but also to link up with consultant relations teams in the US and Europe.
The manager, which has $169 billion in AUM globally, had been part of Lehman Brothers, but underwent a management buyout last May. Gunns says the Lehman heritage has not been an issue for the firm in Asia.
His role will involve a substantial amount of travel around the region, with Australia one of the major focuses, given that it is a very consultant-driven market, says Gunns, adding that he has worked there in the past. He will work with Neuberger's man in charge of Australia and New Zealand, Paul O'Halloran, to strengthen consultant relationships in those markets.
O'Halloran is the only employee in Australia at present, says Gunns, but the intention is to build up capability there.
As for expansion elsewhere, in addition to the existing nine analysts in Shanghai and five investment staff in Hong Kong, the firm plans to add staff in Singapore, its Southeast Asian hub. Edwards declined to give any specific targets in terms of headcount or AUM.
"We are growing selectively -- the right people are not necessarily available at present," he says. He believes Neuberger Berman will attract personnel because it doesn't have "legacy issues" and offers the chance of becoming a partner in the business.
That's because the management buyout created a clarity of purpose, he says, meaning the firm doesn't have the agenda of some other asset management companies. "All we do is run our client's money," says Edwards. "The clients come first; we couldn't be any more aligned with client interests."
Citing the example of an asset manager that is part of an insurance company, he points out that if such a group had to make a huge payout due to a problem in Florida, for example, that might affect bonuses for the asset management arm of the business in Hong Kong. "We don't have that problem," says Edwards.
Neuberger's low turnover will no doubt have helped. Out of 265 investment professionals globally at the firm in 2007, 263 are still there today, with one retiring and one moving outside the industry.
The firm is focused on offering more complex, customised solutions to the larger institutions in the region. If a client wants exposure to hedge funds, for instance, Neuberger can create a customised portfolio of such assets, says Edwards, or provide tailored exposure to distressed small and mid-cap loans. "We invite complexity rather than trying to push a 'cookie-cutter' approach," he adds.
Mid-market firms in the US -- those with Ebitda of around $50 million to $100 million -- haven't benefited from the recovery in the larger banks' appetite to lend, he says. "It's this sector that's been hurt, while the big companies have been bailed out." As a result, spreads on small and medium-size company credit haven't fallen significantly, adds Edwards.
Neuberger has the benefit of access to its own broad proprietary database, including many details of private market lending and equity issuance, he says. "Not many people have access to that kind of intellectual capital, and you need that depth and breadth of perspective to be able to price private market transactions today."
As for the market outlook, Edwards sees the period running up to mid-2007 as an anomaly and believes, relative to this period, there will be higher levels of risk, more defaults and higher volatility in the future. And that, he says, will make it easier for good active managers such as Neuberger to derive returns.