Asia continues to lag other regions for integrating ESG principles with investing; better data and stronger regulatory requirements will help institutional investors, market observers say.
Now, itÆs making up for lost time.
Robeco, which has cornered 25% of the Dutch funds market and has a sizeable $65 billion in assets under management in the US, is aggressively entering the Asian market. Its has a strong foothold in the pension market in The Netherlands, and hopes to build on that experience as it expands into Asia.
In terms of products, Robeco has a wide range of plain vanilla equities and fixed-income portfolios that invest globally, regionally, or in specific markets.
What sets it apart from others is its wide variety of niche products, including energy- and water-related funds managed by its Zurich-based unit Sustainable Asset Management, fund of funds managed by Sage Capital in New York, and commodity trading advisory services provided by Dutch company Transtrend. Robeco also has other portfolios that include private equity funds and structured products.
Intially, Robeco û which is part of retail bank Rabobank û is focusing on building its business in Japan, India and Greater China.
ôYou could say that Robeco has forgotten about Asia in the past,ö says Frank Kusse, Rotterdam-based CEO of Robeco International. ôRobeco is now committed to improve its position in Asia.ö
Kusse previously worked for ABN Amro Asset Management and played a role in building its retail business in Asia.
Robeco set up its operations in Japan 18 months ago, and has seen its assets under management there grow to Ç2 billion ($2.9 billion). That amount, plus another Ç500 million ($730 million) scattered across Asia, make up its total assets from investors in this region. In terms of assets invested in Asia, Kusse says the region makes up a significant portion of the Ç8 billion ($11.5 billion) it has invested in emerging markets worldwide.
Although the Ç2 billion ($2.9 billion) it manages for Japanese clients is ôpeanutsö in that $7 trillion market, itÆs nevertheless a good start for the entire region, Kusse says. He notes Robeco was able to raise that amount fast because there was strong demand for its CTAs, multi-market bond funds and for products structured around those portfolios. RobecoÆs focus in Japan is the institutional market.
In India, Robeco has a presence through its Canara Robeco Investment Management joint venture in Mumbai, of which it has a 49% stake.
Greater China is where all the new developments are happening at the moment, including the recent opening of an office in Hong Kong which will serve as RobecoÆs management center for Greater China and Southeast Asia.
Robeco has named Frances Chang as its CEO for Greater China and Southeast Asia. Previously, Chang was head of retail for the same markets in ABN Amro Asset Management and was the chairman of the ABN Amro Xiangcai joint venture in China that has since been renamed to ABN Amro Teda.
Within Greater China, Robeco is focusing on building a strong distribution network in various priority markets, transferring the management of its Asian portfolios to Hong Kong, and forming a joint venture company in China.
Priority markets for building the distribution businesses are Hong Kong, China, Taiwan and Singapore.
In Hong Kong, where Robeco is still waiting for the approval of its status as an asset manager from the Securities & Futures Commission (SFC), it plans to enter the pension market and third-party distribution.
ôHong KongÆs pensions market is crowded and consultant-driven. It is a difficult market to penetrate. The great challenge for us is to be on the platforms,ö Kusse says. He believes Robeco ôstands a chanceö because of its niche products and its reputation, among other things.
Robeco plans to build the business through master agents and sales companies in Taiwan and through private banks in Singapore.
Assuming it gets its approval in the coming weeks, Robeco plans to transfer to Hong Kong around Ç1.5 billion invested in Asia but managed in Rotterdam as well as some of the managers of those funds in the first quarter of 2008. Together with some local hires, Kusse expects Robeco to have around eight or nine people on the investment side on the ground in Hong Kong by the first quarter as well as around 12 or 13 people on the operations and distributions side. By April, that combined number could grow to around 25, he says.
Robeco also plans to roll out its funds early next year, and launch new ones, pending regulatory approval from the SFC.
With regard to the joint venture company in China, Kusse says Robeco has already entered into talks with several possible partners, including one that was nearing a conclusion only for both parties end up walking away from the negotiating table.
ôWe had very detailed discussions recently. We had reached a far stage in those discussions, but the talks were terminated,ö Kusse says. ôChinaÆs market is so hot and some fund management companies there think they can run the company by themselves.ö
He notes that exploratory talks with other parties are ongoing, and he is confident that within six to nine months, Robeco will be able to announce that it is either entering into a joint venture or buying into a company in China.
ôI am quite hopeful that by that time, we would have agreed with a partner there and things would be moving along,ö he says.
Kusse says Robeco is ôwilling to pay the priceö of entering into a joint venture in China because it sees it as a long-term commitment.
ôThe funds market in China will likely grow to be the size of the US in 30 to 40 years time, it will be a giant. The pensions and institutions markets there are still at the very early stage,ö he says.
He acknowledges that the timing of entering into a joint venture now may not be ideal now because ôassets are inflatedö, but he says that is justified given their long-term plans for that market.
Robeco wants to have a full coverage business in China, including pension, insurance, and retail clients as well as private banking distribution.
Right now, Robeco is already in talks with securities firms and fund management companies for a different deal involving distribution of QDII funds, in the area of providing advisory services.
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