Nikko AM buys Treasury Asia, sparking reshuffle

After losing four equity specialists to Threadneedle recently, Nikko Asset Management has acquired Asia ex-Japan equities boutique Treasury Asia Asset Management.
Nikko AM buys Treasury Asia, sparking reshuffle

Japan's Nikko Asset Management has continued its regional buildout with the purchase of Treasury Asia Asset Management (TAAM), a boutique equities house with operations in Singapore and Sydney.

TAAM’s eight investment executives will join Nikko in Singapore, boosting the equities team there to 11-strong. They will report to TAAM founder Peter Sartori, now head of Asia equity at Nikko AM, who in turn reports to Wang Yu-Ming, international chief investment officer. One TAAM analyst will remain in Sydney and transfer to Nikko AM’s office there.

Yesterday’s news comes nearly two months after both parties inked a memorandum of understanding (MoU), as reported, and also after Nikko AM lost four equity specialists to UK fund house Threadneedle Investments. Among the departures was chief investment officer Ng Soo-nam, who joined Threadneedle as head of Asian equities.

Tokyo-based Nikko AM has been aggressively expanding in recent years, most notably via its takeover of Australian firm Tyndall Investments and Singapore’s DBS Asset Management.

Now, after acquiring TAAM for an unspecified amount of capital, Nikko AM will focus on expanding its product range to offer institutional-type quality products to retail investors, says Charles Beazley, president and CEO of Nikko AM.

“Our stage of development is now really at its peak. We’ve got the right geographic footprint, and now we’re turning to client demand,” he says. “We had a firm conviction that we need an institutional quality [firm] to compliment to our existing capabilities in Singapore.”

Beazley says the purchase of TAAM, which has around $300 million in AUM, significantly bolsters Nikko AM equity capabilities, and the firm will look to add more equity and fixed income professionals in the Lion City in the coming months.

“We are absolutely increasing our Asian equity team,” Beazley tells AsianInvestor. “We haven’t finished hiring in Singapore. This is a very important place for us to have our capabilities and grow our team, both in terms of equity and debt.”

The relatively small size of the TAAM acquisition reflects the fact that acquisition targets are getting fewer and farther between in Asia as competition hots up. Global fund houses are also seeking to build up their manufacturing capabilities in Asia, although face a bottleneck due to the lack of supply.

While Nikko AM does not rule out future acquisitions, the $156 billion firm says it is now focused on expanding its existing offerings.

“Once we have products on board and are capable of meeting the international best practices, then of course we will be increasing internationally to be able to cope,” Beazley says. “[But for now], we have to make sure it’s all working well. That’s our real focus.

“Private debt is on the agenda, real estate is on the agenda, and bank loans are on the agenda,” he adds.

Despite the relative dearth of fund house targets in Asia, Beazley suggests further consolidation may be on the cards. Growing regulatory oversight leads to higher compliance costs, which can challenge boutique managers.

“Life is tough and getting tougher for small private boutiques,” he notes. “The regulators are absolutely serious, and the cost controls are absolutely serious. It’s expensive and becomes an issue.”

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