Harvest's Hong Kong CEO talks global expansion
It's hard to say what raised Chinese fund managers' eyebrows more.
Was it Beijing-based Harvest Fund Management's plan to take over Deutsche Asset Management's Asian and Greater China equity investment platform? (When others are struggling to find talent or come up with a business plan for Hong Kong.) Or was it Harvest's choice of employees in Hong Kong?
It's been 10 months since Harvest Global Investments announced its takeover of Deutsche AM's Asian and Greater China equity investment platforms in Hong Kong, and the essential hires are now in place. Harvest has retained the assets in the existing Deutsche funds sub-delegated by Deutsche AM to the portfolio-management team transferred to Harvest Global. The Hong Kong platform has also attracted European institutional money.
(It has thus far won mandates from a government account, an Asian corporate, a European fund house, and another from a third-party asset management company for a retail product.)
By contrast, hiring -- and turnover among the new hires -- at Harvest's largest Chinese rivals in Hong Kong is happening behind the scenes.
Chang Huifeng, chief executive of CSOP Asset Management, the joint venture between Shenzhen-based China Southern and Oriental Patron, left in recent weeks for personal reasons, taking with him the aggressive plan for mergers and acquisitions he outlined last summer. He will be replaced by Ding Chen, Southern's long-serving head of international business.
At China Asset Management, CEO Cheng Haiyong (originally a deputy CIO transferred from Beijing) is now spending more time in the Chinese capital than in Hong Kong, leaving the office to be run by deputy CEO Anthony Ho with support and direction from Beijing. Cheng is back in Beijing to plug the gap left by popular portfolio manager Sun Jiandong and colleague Zhang Long, who have left China AMC.
Harvest Global CEO Michele Bang, who was transferred to Hong Kong from Deutsche AM's Singapore office, says her next target is to win new mandates -- either in the form of institutional mandates or by sub-managing assets for other brands. The brand has been through the interview process with the key institutional investment consultants and is expecting to receive the elusive "buy" rating this summer.
The firm has also won the seal of approval in the form of the Statement on Auditing Standard 70 -- a prerequisite before institutional investors can place money into a manager.
Asked how she plans to develop a global profile, Bang says Harvest is targeting European and Asian pension money, sovereign wealth funds, funds of funds and family offices, and the likes of Australian superannuation funds. (Better yet, more European institutions are coming to Asia, with dedicated investment-research offices, to better understand 'specialist managers' in Asia -- that's exactly the kind of image Harvest would like to project.)
For this task, she has hired Pieter Oyens to the role of head of sales and product development for Harvest Global. In the heyday of structured products, the Dutchman was a poster-boy investment banker who headed fund derivatives sales for ABN Amro and later RBS, following the RBS-Fortis-Santander three-way takeover of the Dutch bank.
And, apparently, Oyens is not the only foreign or investment-banking recruit Harvest has picked up. There are also Stanford-educated Citi and Barclays Capital alumni, and the asset manager has also snared candidates who have worked for fund-management brands in Hong Kong. The names range from BEA Union, PineBridge (formerly AIG Global Investments), Invesco, BNP Paribas Investment Partners and Hang Seng. Bang refused to go into detail or comment individually on the appointments.
Harvest Global's headcount in Hong Kong is now 27. Ideally, Bang needs to hire a few more professionals to take up positions in the investment team now headed by its CIO Li Kai (one of the original managers of Harvest's first QDII fund launched in 2007). Of this number, nine came from the Deutsche platform, five of which were involved in portfolio management.
A few Deutsche sales staff have defected from Harvest to China AMC in Hong Kong during the transition period. Beyond that, Bang says there's been no further staff turnover since the completion of the integration and that the integration is "seamlessly blending" the culture of both the Harvest and Deutsche brands.
However, neither Harvest's head of sales nor its head of risk management speaks Mandarin. Asked if this could create operational issues, Bang gives a firm no. It is not meant to be a language contest, she says, adding: "The plan is to develop an international business. We look at each individual's skill sets and have hired professionals who can deliver."
Many suspect a rigid management structure is in place, as seen among mainland fund management firms, and have queried the necessary transition the team will need to undergo once it operates in Hong Kong. Some, AsianInvestor included, wonder about the functioning of the most basic things -- from creating fund fact sheets that meet reporting standards, to communicating an investment strategy or management process appropriately.
(See our story 'Wanted: Mandarin-speaking global business development execs' published in October.)
But Bang refuses to be compared to other Chinese managers, saying she finds being bracketed as a mainland firm a "cliché". She wants to convey the message that Harvest has always been global -- that its Hong Kong initiatives were not a new exercise, but an extension of what Harvest had already built in its home base in Beijing.
While Harvest was one of the original 'old 10' managers founded in China a decade ago, she says, it was one of the earliest to open up to foreign expertise and bring in an overseas shareholder (Deutsche) in 2005, along with investment research and risk management techniques.
Moreover, Bang says Harvest is different from foreign managers with strong A-share fund track records, saying she is "worried" about how foreign managers with thin research staff on the ground in China can compete side-by-side with experienced domestic brands.
Harvest CEO Zhao Xuejun says the overseas business is one of Harvest's three core pillars, alongside the institutional and retail businesses. He aims to raise the portion of AUM related to overseas assets from just 5% as of end-2009 to 20% in five years. Harvest Fund Management's total AUM is close to Rmb240 billion.