Credit Suisse looks beyond Aberdeen Asset Management deal
Credit Suisse is ready for a sustained push in asset management in Asia, now that it has closed a deal with Aberdeen Asset Management and installed new key executives.
Salman Shoaib, managing director and head of asset management for Asia Pacific, says the task at hand is to build scale in those areas of expertise that CS has decided to keep, in the wake of last year’s announced sale of most of its traditional long-only business to Aberdeen Asset Management.
Globally the streamlined CS asset management business runs CHF411 billion ($381 billion) in three core areas: alternatives, asset allocation and its Swiss traditional business.
Shoaib’s main concern is the CHF144 billion ($133 billion) it manages in alternative investments, such as private equity, real estate, hedge funds/credit strategies, and quantitative passive strategies including exchange-traded funds.
The firm manages an additional CHF165.6 billion ($154 billion) globally in multi-asset class strategies for high-net-worth individuals. Shoaib says this is something that should also appeal to smaller institutions such as university endowments or corporate treasuries, which are looking for proper asset allocation.
Shoaib says his new colleague Conrad Yan, formerly a managing director at AIG Investments, is now actively marketing the bank’s asset-management products as head of regional institutional distribution. But the idea is to generate a more fundamental and solutions-oriented conversation with clients and institutional investors, in addition to showcasing different products.
That effort is reflected by the recent appointment of David Russ as chief investment strategist of the asset management business globally, the former CIO of Dartmouth University’s endowment, one of the 10 biggest in the United States. Russ has already begun consulting clients, including some in Asia, on broad asset-allocation and portfolio-construction issues.
That door-opening effort is backed up by Yan for institutions and Rami Hayek for third-party wholesale distributors.
Shoaib declined to quantify the size of the firm’s Asian business. He says Asia is currently a small percentage of asset management’s global revenues and profits.
To grow this significantly, efficiently, will face the challenge of the fragmented nature of the region’s markets. But Shoaib believes an emphasis on alternative investments can overcome such hurdles.
“In general, Asian investors are underweight alternative investments,” Shoaib says. “But they are looking at this, and it’s just a matter of time.”
In particular, Shoaib is keen to grow institutional distribution of global product to Asian clients; to enhance its multi-asset investment capabilities; and to provide high-net-worth clients with a broader platform, including greater ‘self-direct’ investments and asset allocation, as many clients in Europe do, by providing them with more building blocks.
Credit Suisse maintains its funds joint venture in China with ICBC, which is part of a broader relationship between the two groups (Credit Suisse was joint bookrunner on ICBC’s Hong Kong IPO in 2006). CS has recently helped the JV manufacture an index fund called CSI 300 Index Fund. Other areas of potential collaboration include launching an ETF – an area of growing interest to Credit Suisse, which has recently launched a series in Europe – and in developing multi-asset class solutions.
Credit Suisse also has a stake in China Renaissance Capital Investments in partnership with several Chinese nationals. CRCI is a private-equity boutique run by Mark Qiu that focuses on mid-sized companies at early or expansion stages of development. It continues to raise money for its second fund, called China Harvest, and CRCI is on track to manage over $1 billion by the end of the year.
Surveying the entire business, Shoaib is bullish on the firm’s ability to meet its growth targets, thanks to its leaner frame. “Everything we have, we have for a reason,” he says. “We’ve chosen to keep it and grow it.”