In a recent interview with FSA, Fabrice Chemouny, the new head of Asia-Pacific at Natixis Global Asset Management, set out a goal to double the share of the company’s assets that it manages in Asia by 2020. While today Asia business accounts for 5% of the French firm’s $950bn AUM, he said he wanted it to reach 10% by the end of the decade.
China will play a main role in hitting the target. It is a market with a “huge potential” for Natixis, according to Chemouny, who cited robust GDP growth and high levels of savings. But the firm has only a two-person representative office in Beijing that caters to institutional investors, such as sovereign funds and pension plans, helping them invest offshore.
The way to expand the mainland business would be to acquire or build an onshore team managing Chinese investments, Chemouny said. This approach would fit with the structure of the firm, which runs an affiliate model made up of 23 independent investment management firms.
JV pullout
Speaking at a press briefing in Hong Kong yesterday, Chemouny dismissed the idea of entering into a joint venture arrangement with an onshore asset manager in China. “I’m not saying that JVs are not working well, but there’s room for improvement,” he said.
The company was in talks with China Industrial Bank about a joint venture in 2007, but the deal was never completed. “We decided it was not appropriate for us,” Chemouny said. “We were at that time a bit frustrated not to have done it, but now we realise it was good for us,” Chemouny said.
The firm is considering an alternative structure, the wholly foreign-owned enterprise (WFOE), which several foreign asset managers have pursued in order to tap into the growing demand for asset management services in China. Chemouny admitted, however, that the firm wasn’t yet ready to take this step.
“In order to set up a WFOE, you need to know how to invest onshore and you need to distribute, and today none of the affiliates we have manage Chinese equities or Chinese fixed income,” he said. “We need to find a team, or build a team, and then it could be a WFOE or a strategic partnership with someone able to distribute our products.”
Ambitious target?
Today, Natixis operates in seven markets in the region: Australia, China, Hong Kong, Japan, Korea, Singapore and Taiwan. Earlier this month, the firm announced an acquisition of a majority stake in Investors Mutual Limited, expanding its Australian footprint.
The firm plans to pursue its growth in Asia along three strategic paths: organic growth, acquisitions and partnerships.
Chemouny said he expected that organic growth would account for at least 50% of the goal. But he did not provide details on how he expected to achieve the ambitious growth target in Asia’s highly competitive industry.
While Chemouny did outline very broad plans to reinforce its presence in all seven markets, he hinted a particular focus on Taiwan, promising “an announcement regarding this market” in 2018.
