Robeco makes headway in Greater China
Dutch asset manager Robeco seems to be back on track after the crisis, having signed several deals for distribution, institutional mandates and sub-advisory partnerships across Asia in recent months, in line with plans set out in 2007.
In China, the Robeco Teda Sustainable Private Equity Fund, sponsored by Tianjin government, was approved to operate in December, when it also got the green light from the country's National Development and Reform Commission. NDRC approval confers the significant benefit that only funds it has approved can be reviewed for investment by Chinese government funds, pension funds and insurance companies.
In the past five years, only 24 in three batches of funds have been approved by the NDRC. Moreover, Robeco's product is the only NDRC-approved fund that focuses on clean technology and sustainability, says Frances Chang, Hong Kong-based chief executive for Greater China and Southeast Asia at Robeco Asia Investment Centre. It is also the only one that invests overseas and has foreign participation as a general partner.
"There are not many sustainable funds like this selling into China," she tells AsianInvestor, adding that it is renminbi-denominated, sources investments locally and will invest 50% in China and 50% globally.
Robeco is also making progress in Taiwan, having set up a securities investment consulting enterprise (Sice) with the approval of the Financial Supervisory Commission in September. The firm is now awaiting final approval on the master agents and Robeco funds registration from Taiwan's Securities & Futures Bureau.
Taiwan requires that offshore funds have a master agent in place for fund distribution. Robeco works with two local partners, Fubon Sice as master agent for its Sustainable Asset Management (SAM) funds and Shin Kong Securities Investment Trust Enterprise (Site) as master agent for Robeco funds. (Zurich-based SAM is a subsidiary of the Dutch firm.)
Robeco expects to receive approval for Shin Kong Site and Fubon Sice in March and May respectively. "With multiple master agents, we can easily roll out product on a more extensive basis," says Chang, who joined the firm in 2007.
(In Taiwan, a fund house needs a Site licence for manufacturing products and a Sice licence to set up onshore relationships with wholesale distributors. With a master agent licence, fund houses can offer offshore products into a Sice before the products even reach bank shelves and retail clients.)
In addition to its retail business through the master agent system, Robeco also taps into the institutional market, and Chang says the firm focuses on two main pillars: government institutions and sub-advisory business.
In the past, Robeco did not qualify to seek mandates from government funds. But a local presence means the firm will be able to take part in the manager-selection process for government mandates. "We will move aggressively into that market," says Chang, who is a Taiwanese native and has strong contacts in the country's fund market.
As for providing sub-advisory business to fund managers in Taiwan, Robeco completed fundraising for a new partner last week on a $100 million China and India mandate. Prior to these deals, Robeco had four existing partners on mandates each worth $50 million to $80 million.
The firm had planned to roll out in Taiwan quicker than it did in 2008, says Chang, but was delayed by the crisis. Still, thanks to Robeco's existing customer base there, clients are very confident in the manager's abilities, she adds.
However, Robeco has seen its biggest growth coming from institutional clients. "In 2009 we saw more institutional investors showing more interest in this region through ETFs and other passive index strategies," says Chang. "Passive investments have, since 2008, been gaining more attention, but in the long run it is active products that will be the main products for both institutions and retail investors."
Elsewhere, Robeco is also expanding aggressively in Southeast Asia, having submitted to more than 20 requests for proposals to institutions in the region. The manager has built up sub-advisory partnerships with local fund managers in Malaysia and Thailand, among other markets. Chang expects to sign more such deals, given that local fund managers in Southeast Asia are increasingly looking to invest overseas and want help in doing so.
However, Robeco is likely to find it tougher in some jurisdictions. "It will be quite difficult for us in Hong Kong," says Chang, "as there is a lot of competition and the regulatory environment has tightened up. A lot of our distribution partners have been reviewing their product offering." While in the past distributors had followed a very open architecture, now they are cutting down the number of fund houses they work with, she says, in a clear shift towards more "guided architecture".
Nevertheless, Robeco expects to sign a big distribution agreement in the territory in the first half of this year and start rolling it out late in the second quarter. The fund manager already has relationships with global private banks, retail banks and insurance companies, says Chang, some of which it established last year.
Meanwhile, the Dutch firm also opened an office in South Korea in August to support its sub-advisory business and continue institutional sales efforts. It also has an asset-management venture in India it set up in 2007 with Bangalore-based Canara Bank.