* Says demand to grow for back-office services for funds
* Seeking acquisitions of asset management companies in U.S.
* Says ready to spend $2.7 bln in asset management buys
TOKYO, April 6 (Reuters) - MUFG is chasing overseas deals to bulk up its business of providing accounting and shareholder services to hedge funds and is even keen to buy asset managers with a $2.7 billion warchest, an executive of Japan’s largest banking group by assets said.
“We are actively pursuing overseas acquisition opportunities in the fund administration business,” said Mikio Ikegaya, who became president of Mitsubishi UFJ Trust and Banking Corp on April 1, in an interview. “It is a very stable business.”
Mitsubishi UFJ Trust is the asset management and trust banking unit of Mitsubishi UFJ Financial Group (MUFG), Japan’s top banking group, which is also on the lookout for acquisitions to support its goal of becoming a global financial powerhouse.
MUFG’s plans for overseas deals underscore the desire of cashed-up Japanese companies to grab assets wherever they can find growth, as a slowing domestic economy and an ageing population curb demand for financial products at home.
Ikegaya, 57, did not disclose details about Mitsubishi UFJ Trust’s potential acquisitions.
He is betting fund administrators will see strong demand as a tougher regulatory environment and investor clamour for transparency drive funds to rely more on third-party service providers for niche functions such as regulatory and shareholder reporting, tax and book-keeping.
Mitsubishi UFJ Trust is already positioning for that expected boom through acquisitions of fund administrators, including UBS Asset Management’s Alternative Fund Services business which it bought last year.
Including Capital Analytics, which it purchased from investment manager Neuberger Berman and is scheduled to complete this month, MUFG’s overseas fund administration business serves 2,400 funds with $312 billion in assets under administration, the company said.
By March 2018, the company has a goal of crossing $400 billion in overseas assets under administration.
Ikegaya said MUFG was focusing on niche services as it cannot hope to match global leaders such as State Street Corp and Bank of New York Mellon Corp on scale in the traditional custodian business, which safe-keeps fund investors’ money.
“Rather, we are trying to build our presence in niche market of providing accounting and other services for funds,” he said.
The executive said his company is also looking for asset management acquisition opportunities, adding it can spend up to 300 billion yen ($2.7 billion) for the purpose.
But he said it would be harder to seal deals of asset managers than of fund administrators because talent is key for asset management companies and retaining senior staff after an acquisition can be tricky.
The company’s investment in overseas asset managers have so far been limited to minority stakes, including a 17 percent stake in Aberdeen Asset Management.
He said possible targets are active funds in the United States.
“We are not currently in specific talks with anyone, but we have listed up (targets) and been monitoring them,” he said. ($1 = 111.4800 yen) (Reporting by Taiga Uranaka; Editing by Muralikumar Anantharaman)
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