Principal AM plans Asia expansion with family office, real estate push
US-headquartered Principal Asset Management is ramping up its presence in Asia to capture fast-growing private wealth opportunities as well as bulk up its alternative asset capabilities, said global head of investments Kamal Bhatia.
“Asia is our fastest growing market,” said Bhatia, adding that the firm will continue to add investment and operational professionals in the region.
Principal Asset Management has about 2,000 employees globally. Bhatia foresees up to half of future headcount will come from the expansion of the Asia business.
Bhatia told AsianInvestor that, in particular, he sees growth in specialist areas of global equity, credit, especially investment grade, and multi asset -- all of which are areas of focus in Asia.
IN GROWTH MODE
Across Asia, Bhatia sees rising demand from family offices, both single and multi-family offices.
To meet investor demand, he said the firm will continue to build capabilities in investment and product specialists.
“Many of our clients, in addition to having investment professionals who are focused on picking securities or investing in real estate, also want people who can work with them for product and advisory as we help them build these portfolios,” he said.
The firm will cater to such demand from its Hong Kong, Singapore, and Dubai offices.
With about $500 billion of assets under management globally, Principal Asset Management operates in six markets in Asia through wholly owned subsidiaries and joint ventures across China, Hong Kong, Indonesia, Malaysia, Singapore, and Thailand.
Parent company Principal Financial Group underwent a restructuring in 2022 to integrate all of its global asset management and pension businesses under one umbrella of Principal Asset Management.
Before the restructuring, Bhatia was chief operating officer of Principal Global Investors.
CHINA, REAL ESTATE PLANS
Principal Asset Management also aims to grow its real estate investment capabilities in Asia, focusing on non-traditional segments such as data centres and logistics rather than traditional residential real estate, which wealthy families can access by themselves.
China is also firmly on the firm's radar.
The asset manager in January acquired a minority ownership stake (17.65%) in China Construction Bank Pension Management, which is the bank’s pension business with the Social Security Fund of China.
CCB will remain the majority shareholder of the pension business with a 70% stake, while SSF holds 12.35%.
Principal also has an asset management joint venture in China -- CCB Principal Asset Management.
“We have an active effort in China looking at logistics assets because that's how I think institutional investors are going to access China real estate,” he said. Warehouses are a classic example as e-commerce continues to grow.
“We want to make sure we are continuing to build our expertise in those areas that are always in demand. We also have teams that look at infrastructure now. So, we're continuing to build that,” he said.
As the infrastructure sector in Asia transitions from public projects gradually to private, Bhatia thinks new growth opportunities will emerge.
He expects that, in future, investment opportunities will occur across Asia rather than be dominated by China.
“What is happening, I think, is the Asia story is more than China now. You have to pay attention to China. But there are also other fast-growing regions in Asia that a lot of institutional investors have interest in,” he said.
These include Japan and Southeast Asian countries, such as Vietnam and Thailand, he noted.