ING buys domestic Taiwan asset management business from ABN Amro
Merged entity will have $13.7 billion of assets under management and will strengthen ING's leading market position in Taiwan, while ABN will focus on its offshore business.
In a move that will cement its position as the countryÆs largest overall asset management firm, ING Group has agreed to buy ABN Amro Asset ManagementÆs domestic business in Taiwan for up to Ç68 million ($86 million).
The deal is still subject to regulatory approval and the final price may be adjusted at the time the deal closes.
The acquisition is seen as a good fit that will complement INGÆs existing domestic asset management operation in Taiwan both in terms of products and distribution channels since the two Dutch firms have been focusing on different segments of the market, ING said.
ABN AmroÆs business, which has Ç2.9 billion of assets under management (AUM) and is the fifth-largest local mutual fund manager in Taiwan, is strong primarily within Taiwan dollar bond funds, while ING CHB Securities Investment and Trust CoÆs expertise lies mainly within equity funds and fund-of-funds.
Similarly, ABN has a strong direct sales team, while ING distributes most of its products through intermediaries. These include Chang Hwa Bank, which is also its partner in the domestic asset management business, as well as other banks, insurance companies (through unit-linked insurance policies) and securities firms. Since the fourth quarter of 2005, ING has also been selling some of its products directly to its expanding client base.
The acquired business is profitable, but will have a slightly negative impact on the debt-to-equity ratio of ING Group to the tune of 12 basis points, the bank said.
The combined business will have AUM of Ç10.8 billion ($13.7 billion), which includes both local mutual funds and institutional mandates. This will translate into a market share of almost 17% - well ahead of its closest competitor Fubon with 6%.
The acquisition will also boost INGÆs current ranking within the local mutual fund industry to the top position with AUM of Ç4 billion and a market share of over 8%.
The domestic businesses of both ABN and ING are registered Securities Investment Trust Enterprises (SITE), which means they are approved to sell domestically registered funds to Taiwan institutional and retail investors. The merged entity will have about 180 staff.
An ING spokesperson said the firm expects the recent growth in TaiwanÆs retail funds business to continue and noted that the bankÆs latest retail fund û a domestic version of an Asia/Pacific High Dividend Fund û raised $380 million on the first day.
At the same time, it sees an increasing number of institutional mandates being awarded. In June, ING received two government-related pension fund mandates when the Labor Insurance Fund and the Labor Pension Fund hired it to invest NT$2 billion and NT$3 billion ($61 million and $92 million) respectively in domestic equities.
ABN on the other hand sees more growth potential in its Taiwanese offshore funds business, which combines a global offshore product capability with strong local client relationships, and is selling its domestic business to focus its resources here.
ôThe trend we are seeing in Taiwan indicates a significant growth in offshore investment activities,ö says Arne Lindman, CEO of ABN Amro Asset Management, Asia Pacific. ôWe are experiencing very strong client interest for international assets as evidenced by a three-fold increase in our offshore fund sales over the past six months.ö
ABN Amro Asset Management has a total of $15 billion of AUM in Asia and $227 billion worldwide.
Aside from its domestic asset management business, ING also operates an offshore fund distribution platform and investment consulting business in Taiwan through ING Fund Services, which has more than $4.4 billion of assets under advisory.
The deal is still subject to regulatory approval and the final price may be adjusted at the time the deal closes.
The acquisition is seen as a good fit that will complement INGÆs existing domestic asset management operation in Taiwan both in terms of products and distribution channels since the two Dutch firms have been focusing on different segments of the market, ING said.
ABN AmroÆs business, which has Ç2.9 billion of assets under management (AUM) and is the fifth-largest local mutual fund manager in Taiwan, is strong primarily within Taiwan dollar bond funds, while ING CHB Securities Investment and Trust CoÆs expertise lies mainly within equity funds and fund-of-funds.
Similarly, ABN has a strong direct sales team, while ING distributes most of its products through intermediaries. These include Chang Hwa Bank, which is also its partner in the domestic asset management business, as well as other banks, insurance companies (through unit-linked insurance policies) and securities firms. Since the fourth quarter of 2005, ING has also been selling some of its products directly to its expanding client base.
The acquired business is profitable, but will have a slightly negative impact on the debt-to-equity ratio of ING Group to the tune of 12 basis points, the bank said.
The combined business will have AUM of Ç10.8 billion ($13.7 billion), which includes both local mutual funds and institutional mandates. This will translate into a market share of almost 17% - well ahead of its closest competitor Fubon with 6%.
The acquisition will also boost INGÆs current ranking within the local mutual fund industry to the top position with AUM of Ç4 billion and a market share of over 8%.
The domestic businesses of both ABN and ING are registered Securities Investment Trust Enterprises (SITE), which means they are approved to sell domestically registered funds to Taiwan institutional and retail investors. The merged entity will have about 180 staff.
An ING spokesperson said the firm expects the recent growth in TaiwanÆs retail funds business to continue and noted that the bankÆs latest retail fund û a domestic version of an Asia/Pacific High Dividend Fund û raised $380 million on the first day.
At the same time, it sees an increasing number of institutional mandates being awarded. In June, ING received two government-related pension fund mandates when the Labor Insurance Fund and the Labor Pension Fund hired it to invest NT$2 billion and NT$3 billion ($61 million and $92 million) respectively in domestic equities.
ABN on the other hand sees more growth potential in its Taiwanese offshore funds business, which combines a global offshore product capability with strong local client relationships, and is selling its domestic business to focus its resources here.
ôThe trend we are seeing in Taiwan indicates a significant growth in offshore investment activities,ö says Arne Lindman, CEO of ABN Amro Asset Management, Asia Pacific. ôWe are experiencing very strong client interest for international assets as evidenced by a three-fold increase in our offshore fund sales over the past six months.ö
ABN Amro Asset Management has a total of $15 billion of AUM in Asia and $227 billion worldwide.
Aside from its domestic asset management business, ING also operates an offshore fund distribution platform and investment consulting business in Taiwan through ING Fund Services, which has more than $4.4 billion of assets under advisory.
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