Natixis Global AM maps out Asia plans

Natixis Global Asset Management has not been in Asia for as long as some of its peers, but the Paris-based multi-boutique group aims to make its presence felt more strongly in the region.

A big step was yesterday's opening of its new Hong Kong office, as first reported by AsianInvestor, and the launch of a South Korean branch is imminent. 

John Hailer, CEO for the US and Asia, flew in from Boston for the event and has been discussing with his regional managers the firm's strategy across markets from Japan to Thailand. AsianInvestor met them this week to hear about their plans.

Michael Chang, currently head of Taiwan, will relocate to Hong Kong to run the business and will be replaced in Taipei. There will also be operations and sales staff in Hong Kong, and investments will continue to be managed by Natixis affiliates elsewhere.

The firm already has offices in Beijing, Singapore, Sydney, Taipei and Tokyo, and the latter will remain the head regional branch.

Only $23.4 billion (3.3%) of Natixis's $711 billion in AUM is sourced from Asia-Pacific, but Hailer sees that proportion rising substantially but, he stresses, steadily.

These assets are spread across affiliate businesses, including Asia ex-Japan equities house Absolute Asia, property specialist AEW, value manager Harris Associates, equity and bond shop Loomis Sayles and exchange-traded funds provider Ossiam.

In October, Natixis obtained a licence to operate in South Korea, and in December it plans to transfer a native Korean from Japan, Jung Tai-Hwan, to Seoul to run the new rep office. It has had institutional clients in the country since early 2010, which Jung has serviced from Japan since he joined in September 2011.

Japan is by far Natixis's most well established business in the region, with $15 billion in assets sourced largely from private and public pension plans. Set up in 1998, Tokyo has 23 staff, including eight sales executives, with the rest spread across investment and operations, all reporting to Kinji Kato, Asia head and Japan CEO.

Japanese pensions make use of sophisticated investment techniques, such as volatility control and minimum variance, says Kato, and the aim is to introduce these across other affiliate businesses and to more client portfolios in the region.

Natixis also has substantial sub-advisory business in Japan and Taiwan, notes Kato – in fact, it may be the leading foreign firm by number of mandates in Japan, he says.

Having started a retail business through a distribution partnership in Taiwan with master agent Fubon in 2007, the firm now manages $1.6 billion there, split roughly 50/50 across institutional and retail clients.

Elsewhere, the firm services several large Chinese institutional clients out of Beijing, and manages $4.7 billion sourced from Australia and $6 billion from the Middle East.

Asked where he sees Natixis's business growing fastest in the coming months, Chang replies that he expects it to be from pension schemes in Hong Kong and Taiwan.

The new Employee Choice Arrangement under Hong Kong's Mandatory Provident Fund scheme will come in on November 1.

In Taiwan, there has been "intensive debate on underfunded liabilities in government pensions", says Chang. The Taiwan Pension Funds Association wants to push further liberalisation of retirement systems. A defined-contribution model will be introduced next year, he adds, which will create a lot of opportunities for fund managers.

Chang also sees significant opportunities for servicing mainland Chinese clients via Hong Kong. “Many offshore wealth management solutions are being developed in Hong Kong for onshore clients in China, and we’d like to take advantage of that,” he adds. “We also want to develop an onshore sub-advisory business on the mainland similar to the one we have in Taiwan.”

While the rep office in Beijing is focused purely on institutions, Natixis would like to work with mainland Chinese fund houses with offices in Hong Kong; the likes of Bosera, China AMC and Harvest. The French firm can help provide the expertise they need to meet their clients’ demands, says Chang, but it has not yet struck any partnerships.

Looking southwards, Hailer is optimistic about the Asean region, particularly Thailand, where Natixis has institutional clients, but also Malaysia.

In addition, he points to growing coordination between Singapore and India, where Natixis set up a joint venture in December last year after buying a 25% stake in local asset manager IDFC. “As the Indian market opened up, we wanted a local partner,” he adds.

Moreover, Natixis has passive investments covered, having acquired ETF manager Ossiam in late 2010. It is starting to market these products in Asia, says Hailer.

“We see funds of funds, traditional alternatives, real estate as all important,” he notes, “but in some cases these are not as transparent or liquid as some clients will need.”

The firm would also like to sub-advise on ETF management, adds Kato, such as on minimum-variance or low-volatility-type products, where local firms may lack expertise.