Norway’s Norges Bank Investment Management (NBIM), thought to be the world’s biggest sovereign wealth fund, has handed out chunky equity mandates for Southeast Asian markets in recent months, say sources.
The $850 billion entity is understood to have awarded asset managers four separate portfolios for Malaysia, the Philippines, Thailand and Vietnam – to the tune of $200 million to $300 million each.
Sources say Franklin Templeton has received mandates for Malaysia and Thai equities this year. And it is thought that late last year Manila-based ATR KimEng Asset Management was handed a Philippine equity portfolio and Dragon Capital in Ho Chi Minh City took on a Vietnam equity mandate.
The portfolios are unlikely to be fully invested as yet, note sources. One Asia-based fund executive says: “Mandates are usually given out in that sort of size by NBIM, save that they need to be built up, so it may take time to reach that target mandate size, especially in the markets they operate in.”
This is not the first time NBIM has handed out Asean country mandates, say sources. Schroders is believed to have been running an Indonesian equity portfolio for several years for the state fund. NBIM also uses other Southeast Asian equity managers, including Malaysia’s Kenanga Investors and Krungsri Asset Management in Thailand.
All the firms mentioned are listed on the sovereign fund’s website as among its external equity managers as of December 31. They all declined to comment, and NBIM also declined to comment.
It is rare for institutions to seek foreign equity mandates in such niche markets, especially in such size, says one fund firm's Asia head of institutional business. Dedicated China and even Korea equity portfolios, for example, are more common, he notes.
Yet some are not surprised by such moves, given that NBIM has an office in Singapore and has said it wants to allocate more to Asia. This is backed up by the fact that the fund is the process of moving toward regional market capitalisation weights for equity investments.
As a result, while consultancy Casey Quirk says big public funds in Asia are shrinking as an opportunity for asset managers, it seems non-Asian entities represent a growing capital pool to tap in the region.
This is reinforced by the establishment of offices in Hong Kong by the likes of Canada Pension Plan Investment Board and the Ontario Teachers pension scheme in recent years, among other large investors. Both have indicated their aim of raising their Asian allocations.
At the time of opening its own office in Singapore in June 2010, NBIM said the city offers good investment opportunities and has a well-developed financial infrastructure. Asset management is a major industry in the country, making it possible for to recruit and retain skilled workers, the fund added. It has also had a Shanghai office since 2007.