HONG KONG (Reuters) - Natixis Global Asset Management, a unit of French bank Natixis SA (CNAT.PA), aims to double its funds under management to $100 billion in the Asia Pacific region over the next three years, using a combination of organic and inorganic growth strategies.
Asia’s asset management industry is marked by intense competitive pressure, thin margins and high fragmentation. But the pie is set to grow bigger with China opening its doors to foreign asset managers a little bit more.
“Our objective is very simple to keep in mind: to double,” said Fabrice Chemouny, the fund manager’s Asia Pacific Chief Executive Officer, at the Reuters Global 2018 Investment Outlook Summit in Hong Kong.
“I’m a hurried man … but we believe in (the plan).”
Chemouny said China will play a key role in reaching that goal.
Last week, China unveiled plans to raise foreign ownership limits in financial firms, including in asset management firms, aimed at widening access for overseas investors to a multi-trillion dollar financial services market.
“This is what I‘m going to propose to my management: to think about acquiring, or to think about establishing a partnership with someone. What we have done always in the past was to try to have 51 percent.”
Chemouny said he wasn’t yet ready to set up a wholly foreign-owned enterprise (WFOE) in China.
“There is a race to have WFOE. Applying … means you have six months to be in a position to have a product seeded locally, it means you need to have a manager … a team that will be in a position to hire with a CEO, a CIO, a risk manager.”
“This is not a simple thing. Some have been in China for a few decades, they have people on the ground, they have scale, we don’t have that. I‘m not ready today to apply for a WFOE license.”
A growing number of foreign financial institutions, including Aberdeen Asset Management, U.S. hedge fund Bridgewater Associates and Vanguard have set up WFOE in China, after Beijing loosened its reins in recent times.
Previously, foreign asset managers looking to sell investment products in China had to operate through minority-owned joint ventures with Chinese firms.
The fund management arm of Natixis is also looking for more acquisition opportunities to bulk up its assets in the region, which currently accounts for 5 percent of its global assets under management, the executive said.
Last month, it agreed to buy a majority stake in Australian fund manager Investors Mutual Ltd (IML), which has A$9.1 billion in assets under management, for around $121 million. Natixis will own a 51.9 percent stake in IML.
Besides China, Japan is another market Natixis is upbeat on.
“We are impressed by what is happening in Japan. Things are definitely improving. It is a great opportunity for Natixis.”
Natixis had assets of $27 billion in Japan and currently it was a “lean set up” said Chemouny. “We need to talk to new channels, establish partnerships. It means hiring people in Japan.”
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Reporting by Umesh Desai, Marius Zaharia; and Sumeet Chatterjee; Editing by Muralikumar Anantharaman