Full of the experience gained at Fullerton Fund Management, Gerard Lee joined Singapore-based competitor Lion Global Investors as chief executive at the end of 2010 with the clear objective of boosting the firm’s overseas third-party asset management business.
A wholly-owned subsidiary of OCBC Bank – the Overseas-Chinese Banking Corporation – Lion Global Investors manages 75 per cent of the S$29bn ($23.5bn) total assets on behalf of the group’s insurer, Singapore-based Great Eastern Life. Third-party assets account for the rest, but they are mainly sourced domestically.
“Based on our current capability and fund range, we are not selling our products widely enough,” says Mr Lee. The firm should be able to break into Japan, Korea, China, Australia and, going west, Europe and North America, he believes.
EARLY DAYS
But setting up offices in various parts of the world would be too costly for now and the fly in, fly-out model is not very effective. People do not buy funds only based on performance, he states, acknowledging the importance of service, brand and information delivery.
“We are very early in the game and we will have to work with on the ground third-party fund introducers to start with, and we will have to ensure that the products they already represent will not conflict with ours,” states Mr Lee.
This is not an ideal solution, he says, but the only one available in the short to medium-term and also the one he used at Fullerton successfully.
Third-party introducers or agents are typically boutique companies, often made up of only a handful of professionals who boast good connections in the industry, having mainly worked in investment banks or asset management companies. Their services are gradually getting known to Asian-headquartered fund management companies who aim to promote their products in the US or Europe.
Third-party agents are paid “a retainer” or a flat fee and then in case of a successful deal, they are given a trailer, or a percentage of the management fee earned from the agreement with distributors.
“You give away some fees, but then you immediately get your first half a dozen to a dozen clients. If the business begins to build up scale, then I will start to set up sale offices,” he says.
Third-party agents may be also come in handy for entry into Japan, where the culture is very different and language is a barrier, but they will not be used for South-East Asia, Taiwan, Hong Kong or China, he explains. One of the first things Mr Lee did was to set up marketing teams, at the moment all based in Singapore, who focus on various regions in the world for strategic growth.
“China is one of my priorities, as you can’t be a truly Asian asset management company without a China strategy,” he says, hinting at the possibility of a future joint venture there.
Mr Lee hopes to make inroads with high level distributors and gatekeepers such as multi-management companies, private banks or family offices and even fund platforms, where the money is traditionally less sticky. Building a track record as Asian specialists, both in the equity and fixed income space, will eventually allow the firm to target large institutional investors too.
Lion Global Investors has already registered five equity and fixed-income funds in Luxembourg, with the plan to launch Ucits compliant structures globally. These funds are also pending approval in Singapore.
ASIAN ATTRIBUTES
Being part of a large banking group and having been in the business for almost three decades, the firm has an advantage over an asset management boutique, he says. “The most important things we sell are the four Ps: performance, process, people and products.”
But what will appeal to Western distributors are the “truly Asian attributes”, claims Mr Lee. Unlike many global asset management firms operating in Asia, shareholders, asset managers and professionals at the firm are all Asian and this is a strong selling point.
In his expansion strategy, Mr Lee takes inspiration from the many examples of success of “made in Asia” products.
“Who would have imagined in the 1960s that Toyota, Honda and Nissan would be the best selling cars in the US today?” Korean Hyundai also has made big inroads in the US automotive market. Samsung mobile phones, unknown until the 2000 Olympic Games in Sidney, are now the top selling handsets in the world; Singapore airlines, which started operations only in 1972, are now rated very highly on a global scale.
“The fact that the market is already very competitive and crowded must not stop you from trying, as there will always be somebody who is willing to try out a new product,” he adds. Performance, service and innovation are the key ingredients, but innovation does not mean re-packaging products using derivatives and flogging them to the market.
