Generali CIO looks to ramp up Asia investments

Generali intends to substantially increase its India and China private equity investments and is looking to grow its regional real estate portfolio, the insurer’s chief investment officer told AsianInvestor.

With a particular focus on private equity and venture capital investments in China, the Italian insurer’s asset management arm is awaiting approval of its RQFII application.

Meanwhile the CIO is keen to make major investments in Vietnam, but is finding it difficult because of the capital market restrictions placed on foreign investors.

Nikhil Srinivasan joined Generali Investments at the start of 2013 when, he admits, in Asia “we were hardly present. We had good Asian exposure, we had made money, but it wasn’t significant. So looking at our exposure now, we are at least twice where we were.”

Srinivasan said that the Asian private placement market was ‘relatively embryonic’, and Generali had not found it easy going since making its initial investments over the past eight months. He said that Generali has less than €1.5 billion in private placement investments.

The Italian insurance company has around $500 billion in AUM, of which 5% is in Asia.

In India, Generali’s investments are mainly in equity and fixed income. In China, it has focused on investments in healthcare PE funds, to which it currently has an exposure of around $500 million.

Srinivasan said of China: “We intend to be quite aggressive in private equity and venture capital, so we will be happy if we go from close to a billion to closer to $2 billion in the next couple of years.”

He added he was looking at investing in small to medium-sized PE funds of between $300-800 million.

Apart from its PE investments, Generali has three businesses in China: an insurance joint venture with China National Petroleum Corporation; a joint venture asset management company – Generali China Life AM; and a 30% stake in Guotai Asset Management in Shanghai.

Srinivasan said he wanted to have ‘a few billion’ invested in China in the next two to three years: “I would like to have 1-2% of assets in China in the next couple of years. That would depend on licences and market moves. Right now it’s less than 1%. I’d like to get to at least 1% in the next 18 months if I can.”

Generali Investments has applied for a renminbi qualified institutional investor (RQFII) licence. Srinivasan says he is ‘very bullish’ on Chinese fixed income and is keen to gain a RQFII quota, though he did not know when or how much Generali would be granted.

“I’ll invest as soon as I can get it,” he said. “If they give it to us, we will be fully invested in a very short period of time.”

Outside of China and India, Srinivasan is effusive in his praise for Vietnam’s economy, but cannot get past the restrictive capital controls.

“I’d love to have more in Vietnam.,” Srinivasan said. “The macro picture looks great; rates are going down, GDP is expanding, exports are rising. But from a capital point of view it doesn’t give us the opportunity.

"You want bank privatisation, you want clarity of regulation, you want lots of things. I think it’s a phenomenal economy to invest in, but it’s very hard for people like us to invest serious money.”

Generali Real Estate (GRE), the property investment arm which Srinivasan is also in charge of, currently has less than  $1 billion invested in Asian property assets. But Srinivasan is keen to increase this, saying that it would be ideal to have 5-10% of the global property fund invested in Asia, compared to around 3% right now.

“The cash is available - we have got $30 billion globally in real estate assets,” Srinivasan said. “Having $1.5 billion in real estate assets in Asia in the next 3-4 years would be great.

“Asia wouldn’t give us the steady yields we get in Europe but it would give us the potential for higher capital appreciation.”

Last December GRE announced the appointment of Andy Tan as head of its Asia operations. Singapore-based Tan is tasked with overseeing GRE’s Asian portfolio, including new investments and the enhancement of existing assets.