Prudential AM taking local businesses international
Graham Mason, Hong Kong-based CEO at Prudential Corporation Asia's fund management business, says the $80 billion business is in the early stages of searching for salespeople who can take the firm’s local market products to a global clientele of investors.
Prudential Asset Management, as the brand is known in Hong Kong, is affiliated with the British insurer (not to be confused with US-based Prudential Financial). Despite this connection, it is an Asia-only business, operating in 10 local markets primarily selling locally domiciled products to the local retail market. Although plenty of sales come through Prudential insurance channels, an average of 67% of revenues are generated by third-party distributors.
(Prudential Corporation Asia, or PCA, operates in some markets as such, and in others as Prudential Asset Management or Prudential Portfolio Managers. It is the Asia business of Prudential plc.)
Mason, who transferred to Hong Kong last year to take up the chief-exec role, says his challenge is to regionalise the product offering, and ultimately to sell PCAs Asian expertise to investors in Europe, North America, and elsewhere.
Unlike most of PCA’s competitors, its flows are localised, with relatively little from Western clients.
Mason has been involved in the group’s asset management business for 17 years. He helped to set up Prudential’s UK-focused fund group, M&G Asset Management, in his native South Africa in the early 1990s. He also worked in London at M&G, which has a large retail presence in the UK and continental Europe, among other parts of Prudential. His transfer to Hong Kong from Cape Town was to replace Arne Lindman, who had departed to run Fidelity International’s Asia-Pacific business.
M&G is best known for global thematic products such as natural resources, but it is not an Asia expert – that capability has always been developed market-by-market with PCA, which really took off as a joint-venture in India with ICICI Bank.
Mason says there is practically no overlap between what PCA and M&G do in terms of portfolio strategies, but he can use his history at M&G to help it and Pru to cooperate on sharing costs in operations, compliance and so on.
“The idea is to have two centres of excellence in investment management, M&G and Prudential Asset Management, sharing an operational platform,” he says.
However, he notes that this objective is for the longer term. Right now in Asia, PCA’s goal is to better leverage its local investment businesses and cross-sell these within the region.
The firm now has 40 Sicav funds registered in Asian markets, based on capabilities such as China or Indonesia equities, or Asian corporate bonds. The firm’s main strengths are high-dividend Asian equity strategies and spread products. Last year the firm hired Beonca Yip to build a regional sales team for regional distribution channels.
It is also filling an obvious gap in its business by redoubling efforts to win institutional clients. Paul Hancock, who has been with the firm for four years, leads this effort.
Mason says PCA has over the past two years won small mandates from central banks and sovereign wealth funds, two of which have since increased funding, including one Southeast Asian central bank. Again the firm is selling its high-yielding equity and corporate bond products.
Mason credits Guy Strapp, his deputy CEO and head of investments, for having engineered an improvement in the firm’s various investment teams over the past few years. He notes that if Prudential AM is to compete for third-party business, be it wholesale or institutional, it has to have the investment performance to back it up.