Updated with clarification.
Aviva Investors hopes to carve out a U.S. business focused on its multiasset and fixed-income capabilities, along with potential expansion into illiquid debt investments like infrastructure and real estate that already are popular with its U.K. and European clients, CEO Euan Munro said.
Mr. Munro, who had led the multiasset and fixed-income business at Standard Life Investments before joining London-based Aviva in January 2014, is hoping to extend the success of its U.K., European and, most recently, Canadian operations to the U.S. as well.
"Since I've started as CEO, we've doubled the assets (managed by investment teams based) in North America," Mr. Munro said. "We started with $8 billion and we've grown to $16 billion. A fair amount of that is in Canada, where we've had success and Aviva's brand is better known ... We're pretty optimistic that some of our abilities are going to meet with interest in North America and we've been beefing up the team there." Aviva Investors had £352 billion ($472 billion) in worldwide assets under management as of Sept. 30. (The firm does not break down assets by client location.)
Among those who have been appointed to senior U.S. positions at Aviva in the past year to assist in its U.S. expansion are:
- Mike Craston, former CEO of Legal & General Investment Management America, as chairman;
- Tom Meyers, formerly managing senior director at LGIMA, as executive director, Americas, and head of distribution; and
- David Cumming, previously head of equities at Standard Life Investments, as head of equities.
Mr. Munro said that with Mr. Craston's arrival at Aviva in 2015 as head of client services, "he obviously came with some ideas and vision into what we could be in North America, but I suppose it was about a year ago we really started in earnest to make that vision happen."
While Aviva's Canadian business is more established, particularly its Canadian fixed-income investments, Mr. Munro hopes to replicate the success of Aviva's multiasset business north of the border in the U.S.
"We expect that will have a carryover to the extent that we have good links with global consultancies such as Cambridge (Associates LLC) and that they're recommending it to Canadian clients, so we see no reason why they wouldn't recommend it to U.S. clients," Mr. Munro said.
Aviva executives also hope, with the addition of Mr. Cumming, to develop a stand-alone equity offering in the U.S. and also apply that to its multiasset offering, Mr. Munro said. "My view is that Aviva Investors has been very, very strong in fixed income and multiasset," he said. "We would historically not have been recognized as an institutional-strength equity house, except U.K. and European equity classes. That's obviously something I'm keen to change.
"Part of the reason that we want to build out the equity capability is we believe our multistrategy solutions would benefit from more thematic-type ideas being developed by equity colleagues," he added. "So even if we had no ambition to grow equity as an asset class — and let's be clear, we do — but even if we didn't, we believe that having those equity experts in greater numbers is going to be important to make our multiasset solutions work very well."
Aviva's illiquid lending investments that are popular with U.K. and European clients should also gain interest among U.S. institutional investors, although gaining a foothold in the U.S. isn't easy, Mr. Munro said. "That's an area where we have a sizable exposure in Europe, and there may well be some North American clients that have a lot of illiquid asset exposure to North America that may be interested in diversifying away into areas where we have access," Mr. Munro said. "These illiquid opportunities tend to depend on you being part of a network. It's a brand issue as well. It's difficult to step into a new geography and immediately be invited to fund rolling stock deals or pipeline deals. It tends to be to those who've been operating there for a while."
While Mr. Munro is aware of the difficulty in expanding into the U.S. institutional money management market, there are elements of Aviva's investment lineup that fit a unique need, particularly for defined benefit plans, he said.
"You have to find your niche," Mr. Munro said. "We don't anticipate that we're going to go head-to-head with some of the 800-pound gorillas. I think we've got some things that are definitely to our advantage. One aspect is that we very much have an insurance heritage and managing against liabilities. We do think while the overall DB pension pie is shrinking, the liability-aware investment opportunities are rising. The style of investing we do, liability-aware, credit selection and so on, we think will be appropriate."
Also, capacity concerns in credit investing isn't a worry at Aviva, he said. "Some of the incumbent managers in the credit space are running out of capacity, so our intelligence is that a number of the big consultants are looking for other managers to come alongside. We do have the capacity to come along and take in new clients."
While Aviva Investors works to expand in the U.S., its parent company, Aviva Group, could potentially look to add to its U.S. operations through acquisition, although Mr. Munro would not comment on any pending deals.
"Aviva Group does have capital and has said it has an appetite for bolt-on acquisitions, and that would obviously include ... the asset management side. The culture that I've tried to create at Aviva Investors is one where colleagues across different asset-class disciplines collaborate to solve client problems, so we are not like a multiboutique model. We're very collaborative across the asset classes. So culturally I might have some difficulties with a very, very focused boutique type of acquisition. But certainly, it's a possibility that we would consider something."