Nikko AM, LGIM agree tie-up amid rise in cross-border deals

Japan’s Nikko Asset Management and UK-based Legal & General Investment Management are to cooperate on providing products to their respective clients, reflecting a rising trend.
Nikko AM, LGIM agree tie-up amid rise in cross-border deals

Japan's Nikko Asset Management and UK-based Legal & General Investment Management (LGIM) have struck a deal to cooperate on providing products and services, reflecting a growing trend for such cross-border tie-ups.

More of these types of deals are expected, particularly as Asian asset managers look to the US market for distribution reach and product capability, said Justin Ong, asset and wealth management industry leader for Asia-Pacific at PwC.

The Nikko-LGIM agreement follows an alliance unveiled this week between Tokyo-based fund house Diam and Malaysia’s Maybank Asset Management to jointly develop investment strategies. And in April last year, Chinese wealth manager CreditEase inked a similar tie-up with US fund house Wellington.

Usually such agreements won’t involve two direct rivals, noted Ong, but rather fund houses with clear niches in their markets or regions and minimal overlap on products and strategies. 

LGIM, part of insurance group Legal & General, will provide global fixed income products for Nikko AM to distribute to Japanese investors – largely insurers and banks. The first funds are expected to launch in mid-2016. The relationship will mainly be focused on separate accounts, but will also cover pooled products.

In turn, the UK firm will facilitate the marketing and sale of Nikko AM products in the UK and other countries. Asked which types of funds would be distributed in Europe, a spokeswoman said they would be primarily come from Nikko AM’s Ucits range but that the specific products had not been decided upon.

LGIM already has Japanese clients and a business co-operation agreement with Meiji Yasuda Life Insurance, which was signed in September 2015.

Asked if it planned more such tie-ups, LGIM chief executive Mark Zinkula said the fund house was continuing to develop relationships with Japanese financial institutions, with Japan a key part of its global strategy.

Such moves reflect a shift towards a new way of doing business in the investment industry, PwC’s Ong told AsianInvestor. “With cost pressures, margin compression and higher regulatory/distribution barriers globally, smart fund managers who want to access new markets, technologies and product development capabilities are looking for alliances and joint ventures outside of their usual arenas." 

“I would certainly expect to see more of these coming up, as Asian managers start to look at the US market in particular for distribution reach and product capability,” Ong added.

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