Just as Eastspring Investments starts its big Europe push, Guy Strapp takes over as chief executive. Stefanie Eschenbacher finds out more about the expansion plans of the Asian asset manager.
Guy Strapp starts his new role as chief executive at Eastspring Investments in August at an important time for the asset manager.
The next couple of months will be crucial for Eastspring Investments, the Asia asset management arm of UK-based Prudential, which has started a push into Europe.
The asset manager has recently announced plans to open offices in both Luxembourg and London.
While it is awaiting regulatory approval from the authorities in London, it received green light from the Surveillance du Secteur Financier (Luxembourg). This will enable the business to distribute its largely Asian fund range in Europe.
Although emerging markets have lost some of their appeal in recent months, with investors withdrawing billions, Strapp says there is still appetite for Asian equity and bond funds in Europe.
Despite the leadership change right at the top, Strapp is keen to emphasise that he will continue the expansion strategy that started under outgoing chief executive officer Graham Mason.
While Mason is returning to his native South Africa, he is staying on as executive vice chairman.
Together, the duo oversaw the rebrand of the business earlier this year, which has transformed the organisation and enabled distribution beyond its home market.
Strapp says he has already started promoting the fund range to European investors at industry events. “Creating recognition of our brand is important to us,” he says of his marketing and sales push into Europe.
Explaining his choice of location for the first office outside Asia, Luxembourg, Strapp says it makes a lot of sense for managers to have a presence where its existing funds are domiciled and administrated.
ON THE GROUND
Eastspring Investments initially set up its Sicav range to sell its funds back into Asia. “The portability of the Sicav range into Asia was a major draw,” Strapp says. “Now we are bringing our discretionary capabilities into Europe.”
Assets under management now stand at $95 billion (€73 billion), 90% of which is invested in Asian equities and bonds. The funds are sold in Singapore, Hong Kong, Taiwan and the United Arab Emirates.
Indirectly, they are also available via funds of funds and feeder funds in Japan and Korea.
“Our London office will target UK-based investors and, selectively, other parts of Europe,” he says. “We will initially be looking at France, the Nordic states and Switzerland.”
The Nordics, he continues, present an opportunity because of its large, sophisticated pension fund market. In Switzerland, he will target high-net-worth individuals and private banks.
Eastspring Investments has operations in 11 countries in Asia and this “experience on the ground” is what Strapp says distinguishes it from its competitors.
He says while there is already a comprehensive range of funds across both equities and bonds, he and his team are always looking for opportunities to leverage its Asian capabilities.
“We are responsive to the trends in the market, but I do not like chasing narrow themes,” he continues. “We look for scalable investments.”
The recent sell-off of emerging markets has prompted some to suggest that the Great Rotation is in fact about investors allocating from emerging to developed markets, not from bonds to equities. Strapp, however, says he remains confident.
“Asian investors do invest a significant amount of their money into Asia, and part of the reason why we can go to Europe is the massive interest from Europeans in Asia,” he says.
He and his team will target wholesale investors, funds of funds, private banks and life insurers. Retail investors do currently not feature high on his agenda, with Strapp saying he “cannot be all things to all people”, but that it is likely he would eventually move into the retail market.
Eastspring Investments is not restricting its marketing activities to a small number of its funds. Instead, its proposition is one of marketing the broader Asia capability.
However, Strapp says preferences of Asian investors and those in Europe do differ. “There may be a greater confidence among Asian investors in country-specific funds, such as the Philippines and Indonesia,” he adds.
Eight investment teams run local funds in 11 countries. Strapp says in places such as Taiwan and Korea, they need to follow specific regulatory requirements.
Asian asset managers have often bemoaned the cost associated with setting up and running Ucits funds in Europe and expressed discontent over the fact that they have not been able to raise as much money as quickly as in their home markets. Yet Strapp says Eastspring Investments already has $20 billion of assets under management on its Sicav platform.
A supporter of Ucits, Strapp says the various rival schemes that are currently being considered in Asia are not advanced enough.
“Mutual fund recognition between Hong Kong and China could be very powerful, but it remains to be seen what the details are.”
He says an Asian passport scheme would have to complement the Ucits scheme in Europe, otherwise it will lead to duplication that could make fund distribution less efficient and more costly.
Having joined in 2007, Strapp held the roles of chief investment officer, and chief executive officer of the Singapore and Hong Kong businesses.
Mason, meanwhile, will continue to maintain executive responsibility for the asset management joint ventures in India, China and Hong Kong.
“We worked in a pretty close partnership when it came to developing the offshore business,” Strapp says, adding that Mason’s role will be an important one when it comes to running the joint venture businesses.
“He will be very close to the business and it is a well-planned succession.”
©2013 funds europe