Asia Pacific's family offices are a nimble bunch and never more so than when it comes to ESG where they're already proving to be ahead of the regulators.
Mishra recently added Dubai to his remit whilst continuing to oversee the firm's Hong Kong retail and Singapore businesses. He is one of the firmÆs veterans, having emerged from the funds joint venture with IndiaÆs ICICI Bank that inaugurated Prudential AMÆs Asia-Pacific presence in 1997, turning an internal asset management arm for its parent insurer into a third-party retail provider across the region.
ôWe looked at Pakistan, Indonesia and Thailand,ö Mishra says, answering his own question, ôbut the world was talking about the Middle East. ItÆs like China, itÆs a place you need to be.ö
For Pru, the advent of the Dubai International Financial Centre proved a blessing, offering a well-regulated platform from which to do business. It opened its office there in December 2006 and has begun talks with distributors, including private banks and international and regional commercial banks. Its initial pitch in a crowded field: its Asia country or regional equities expertise, given its on-the-ground investment presence in many markets.
It also intends to manufacture its own funds in Dubai, and has provisional approvals to sell offshore funds, introduce traditional products into the DIFC and the United Arab Emirates, and to manufacture Islamic funds.
ThatÆs the first prong of its Gulf strategy, and is fairly conventional; the DIFC is now home to up to 20 firms primarily conducting asset management business, as well as many more investment banks and private banks.
The second is based on a new memorandum of understanding between its parent insurance company and Jedda, Saudi Arabia-based Aljazira Bank to set up a new takaful (Islamic insurance) company in the Kingdom. The deal is actually with the bankÆs life insurance business, Takaful Taawuni, in which they will set up a joint venture company in which Prudential will be the largest shareholder; eventually the new company will list on the Tadawul, Saudi ArabiaÆs stock exchange.
Part of this deal includes Prudential taking a stake in Bank AljaziraÆs new funds management business, which Mishra says can eventually rise to 51%. He says the deal should be finalised by the end of the year, with the funds JV to be based in Jedda, although no name has been decided. (One thing is certain: Prudential Asset ManagementÆs logo of ôPrudenceö, a female rendition of a classical æcardinal virtueÆ regarding her image in a mirror, will not be used in Saudi Arabia.)
Saudi ArabiaÆs population makes up around half that of the Arab world, but there is little penetration by international banks. Local banks hold the key to distribution, although open architecture does not yet exist. Banks are now in the process, however, of selling off their proprietary fund units, for eventual compliance with Saudi accession to the World Trade Organisation. ôThe regulatory framework is changing fast, and the attitudes among Saudi regulators are positive,ö Mishra says.
The funds JV will manufacture local equity and sukuk products, while Prudential aims to sell its Islamic funds range via Aljazira. Once it received the authoritiesÆ approval, the JV will seek takaful and fund management licenses.
For a deeper look at fund houses setting up in the Middle East, see the October edition of AsianInvestor magazine.
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