PGIM is increasingly viewed as “a brand on the rise” in Asia as it is in the process of rolling out its intermediary business in the region, according to Matt Shafer (pictured), head of international distribution at PGIM Investments.
PGIM, which has a long pedigree in its institutional business outside the US and an extensive history in its US intermediary business, is a relatively latecomer to the intermediary business outside the US.
In Asia, it only started its intermediary business in earnest in 2021 when it hired Jessica Jones to become regional head, although Shafer noted that the firm had made good headway selling into the global private banks and financial institutions and increasingly regional banks and financial institutions as well.
This is despite the fact that, as Shafer noted, competition is fierce with the major financial institutions generally reducing the number of asset managers they do business with and reducing the number of funds on their shelves as well.
Shafer attributes PGIM’s headway to the fact that the firm is able to offer a comprehensive suite of products across both public and private markets and that it is so new to the intermediary business in Asia.
“You really have to have the right strategies and the right focus in order to make headway with these organisations. The reality is they’re looking to do more with fewer players and so that really benefits a firm like PGIM that has capabilities across both the traditional and private market side,” he said.
“Also in a lot of cases, while we’re seen as a brand on the rise, we don’t necessarily have the product placement with every bank on the Street. For us, even in a world where competition is fierce, we’re continuing to get shelf space and build market share.”
On the Origin of Species
PGIM is owned by the insurer Prudential Financial so a lot of what has been built has been for the Prudential balance sheet, although they have operated a third-party distribution structure for many years.
They are now a $1.4trn asset manager and are particularly well-known for their fixed-income capabilities (they are one of the largest credit managers globally across global, US, European and emerging market fixed income in both core corporate bond and high yield) and increasingly across alternatives, particularly in real estate.
In Asia, they have a particularly large presence in Japan, a presence in India and Taiwan and a small office in Australia.
In China, they have a joint venture with Everbright Securities, one of the oldest in the industry and Shafer rules out, perhaps sensibly given how other asset managers have fared there, of launching their own wholly owned mutual fund business for the time being.
Unsurprisingly, Hong Kong and Singapore dominate PGIM’s cross-border business though. They currently have 30 UCITS funds registered in Singapore and a number of private funds available to accredited investors, for example.
Although, Shafer notes that southeast Asia, particularly Malaysia, the Philippines and Thailand are increasingly of focus as well.
“We are spending a lot of time in Thailand and also the Phillipines and increasingly in Malaysia as well. I think the markets are benefiting from a couple of things. One is the growth of emerging wealth there. And two, the markets are starting to open up. Banks in Thailand are partnering with banks in Europe for example and really starting to build platforms that look somewhat similar to their Swiss counterparts.”
Alternatives push
At the heart of PGIM’s focus in the region lies aiming to do more with the big global private banks (although Shafer acknowledges that PGIM’s coverage of family offices is increasing as well, both directly and with external asset managers).
Here, PGIM has benefited from an improvement in flows during 2024 across the industry after a dismal 2023. Shafer notes that a lot of banks started last year with a return to fixed income campaigns and most of these were successful.
Not only that, but most of these evolved as the year wore on, with investors initially dipping their toes into credit with short duration strategies before increasingly moving into long duration as the year wore on.
Shafer notes that there was a similar pick up in flows into equities from last summer onwards, although he noted that most of the interest PGIM witnessed was more with regards to its global and US capabilities rather than emerging markets as that is more the firm’s focus.
The big area of focus and where PGIM is seeing more activity is in relation to alternatives. Shafer notes that the firm’s data centre strategy, which was launched last year, has proved successful among high-net-worth investors in the region.
He also talks about the need to develop a mixture of both open-ended and closed-ended vehicles in order to appeal to as wide a range of high-net-worth investors as possible.
“For 2025, we’re really going to look to increase our capabilities across evergreen for private wealth and so offering more open-ended structures is going to be key for us. I can tell you that from doing client meetings here in Hong Kong and Singapore, the demand for evergreen is increasing.”
Corporate strategy
The background to Shafer’s ambitions for the intermediary business is of course the changes at the corporate level. He is tight-lipped about incoming CEO Jacques Chappuis, although he notes that he does not envisage a radical shift in focus for his business.
“We look forward to welcoming Jacques Chappuis when he starts in May. We still have a lot of work to do to continue our mission for the months and years ahead and we’re just going to continue to do that. For us, the mission’s clear,” he said.
One area which may have more impact on Shafer’s business though given his focus on alternatives is the acquisitions that the firm is making. In 2023, it reached an agreement to acquire Deerpath Capital Management, a mid-market private credit specialist, while it also struck a similar deal with Montana Capital Partners, a private equity secondaries business based in Switzerland, two years prior.
Although, again, he said that any other potential acquisitions would not distract from the core mission.
“My main area of focus is to continue to grow the business organically across both EMEA and Asia and to continue to grow it in the fashion that we have done in the last few years. At the PGIM level, we continue to look for ideas and potential acquisitions, especially on the alternatives side, which fit within the framework of our multi-affiliate model,” he said.
If PGIM is going to be successful in Asia, it requires more and more global and regional private banks ultimately to onboard its funds. It is not exactly a groundbreaking strategy, although its simplicity should not necessarily detract from its effectiveness given that PGIM’s intermediary business in Asia is so new.
“It’s a natural stepping stone from the US to Europe and now into Asia, especially because our footprint and one of our main areas of focus is the big global financial institutions and big global private banks and knowing that almost all of them have a footprint here in Asia, focused on that growth in Asia, it was a natural place for us to come,” Shafer said.
