Manulife buys Malaysian fund house

Manulife Holdings has agreed to acquire 100% of MAAKL Mutual, part of Kuala Lumpur-based MAA Group, which will boost its Malaysian assets to RM7 billion ($2.19 billion) and make it one of the country’s top 10 unit trust firms.

The RM 96.5 million deal is expected to close within the next two months and will add MAAKL’s 1,100-strong sales force to Manulife’s existing 300 tied agents, says Mark O’ Dell, Malaysia CEO at Manulife Holdings, part of Canadian insurer Manulife Financial. MAAKL's current CEO, Wong Boon-Choy, will remain following the acquisition.

The firm has RM2.47 billion in AUM, and 19 of its 27 funds are approved for the state-backed Employee Provident Fund (EPF) platform. That means they can be sold under the country’s private retirement scheme (PRS), a government-backed voluntary pension scheme launched last year.

The bulk of Manulife’s existing RM4.5 billion in assets (more than 70%) are managed on behalf of the life insurance business, so the acquisition substantially increases its third-party offering.

“We’ve been working hard on an organic strategy to build our unit trust business, including launching funds under the new PRS last year,” O’Dell tells AsianInvestor. “But we have ambitions to be much bigger in this area – unit trust business is all about scale.”

Manulife declined to comment on whether it hopes to make further acquisitions.

There were three main things that attracted Manulife to MAAKL, he says. One is that “we were impressed with management team, which has been responsible for substantial growth since it was set up [in 2000]”.

O’Dell also points to MAAKL’s sales force, which will almost quadruple Manulife’s existing Malaysian agency team. Finally he cites its product range, particularly the “strong EPF lineup” and 10 Islamic funds. “It would have taken us six or seven years to get where they are now,” he says.

Another factor that makes MAAKL attractive is that it doesn’t do any in-house investment management, notes O’Dell. Manulife Asset Management Services will simply take over running of 19 funds from Meridian Asset Management, another part of the MAA group, and of the other eight from other third-party firms, subject to regulatory approval.

Asked whether there will be any reduction in MAAKL’s fund range or 85-strong headcount after the deal, O’Dell says this would be a normal course of events after an acquisition. But he declined to give details, saying Manulife will need to take stock of the overlaps between the two businesses once the deal is completed.

“Where I do see a lot of synergies is between the domestic equity and Islamic funds,” he says. They compliment Manulife’s traditional strength in fixed income and its broad international range of products, he adds.

For example, O’Dell says he expects to see growing demand for dynamic asset allocation strategies in Malaysia. This is an area in which Manulife Asset Management is building its capabilities in Asia.