Mercer eyes growth markets after realignment
Mercer is seeking to ramp up its penetration of Asia and growth markets this year following a realignment that resulted in the departure of Asia-Pacific investments leader Stephen Roberts.
The consultancy moved to streamline its business into three regions: Americas (US and Canada); EuroPac (Europe and the Pacific); and growth markets (Asia, Latin America, Middle East and Africa). Previously it had four regions: US; Europe, Middle East and Africa; Asia-Pacific; and Latin America/Canada.
In other words it has opted to recognise Australia and New Zealand as mature markets, an acknowledgment not only of their status but also of Mercer’s entrenched position within them, with more than 1,400 staff across the two locales.
The decision to realign can be traced to the arrival of Julio Portalatin at the start of last year as president and CEO of Mercer in New York. A veteran of American International Group (AIG), he had been chief of AIG unit Chartis Growth Economies, which separated out growth markets.
“He has been keen to introduce a realignment for Mercer from having four regions to three, with one of those being growth markets so we can focus on growing these in recognition that the needs of an emerging market are not the same as a mature market,” says Tim Jenkins, who was named regional business leader for both retirement and investments for Asia, the Middle East, Turkey and Africa. Previously he had been leader of Mercer’s Asia-Pacific retirement business.
At the start of this year he took over a large part of the responsibilities of Roberts, who departed Mercer on December 31, with the changes announced internally.
Jenkins notes that the Pacific part of Mercer’s retirements and investments business dwarfed its Asia operations. “Taking out the Pacific market, we will be able to focus more intensively on Asian markets,” he states. “The size of the Pacific meant it would take up a disproportionate percentage of internal management discussions.”
Mercer has 100 staff on the investments side based in Tokyo, Seoul, Singapore and Hong Kong, combined with a management presence in China. It also has 100 employees focused on retirement based in 12 cities around the region, and three investment staff based in Dubai.
Jenkins says that growth markets make up about 7% of Mercer’s revenues at present, against a near-term target of 10% and a longer-term goal of 20%.
“But while Asia is smaller in terms of revenues, it is not in terms of opportunity and that is really important for us in the future,” he tells AsianInvestor.
Last year Mercer obtained investment licences in both South Korea and Hong Kong, enabling it to broaden its services. Its investments business covers both investment consulting and investment management, which adopts a multi-manager philosophy and ranges from research to advisory.
“In many Asian markets the sovereign wealth funds are of key importance, and within our new structure the Middle East will also form a central part of the region,” says Jenkins.
He adds that Mercer also sees endowments and foundations as an increasing area of focus for the firm to build on its acquisition of Hammond Associates in the US, announced late in 2010.
Further, it will seek to build in wealth management across the region. Last August it announced the appointment of Edmund Teo from Russell Investments to lead its wealth management team in Asia following a number of departures, including Hansi Mehrotra.
A spokeswoman for Mercer confirms that Jenkins is seeking to develop a new strategy for wealth management in Asia. Globally the segment is run by Cara Williams based in London.
Jenkins says there have been few redundancies on the back of the realignment. He points to a more significant change in the arrival of Gaurav Garg as its new regional leader for growth markets in the middle of last year. Like Portalatin, he also came from AIG unit Chartis.
Jenkins also highlights the appointment of Ray King last year to lead its private equity and hedge fund efforts, along with his team.
Meanwhile, Peter Promnitz, Mercer’s Asia-Pacific leader for the past five years, has retired, albeit that he retains roles as Australia chairman of Marsh & McLennan (Mercer’s parent) and non-executive director of Mercer’s Australian superannuation trusts.