In a region where big financial conglomerates control distribution and — directly or through affiliates — the vast bulk of managed assets, Sydney-based AMP Capital has made strategic partnerships with such financial powerhouses the building blocks of its growth strategy.
AMP Capital is focused on tie-ups with “national champions” in the region’s biggest savings pools of Australia, Japan and China to power its growth, said Anthony Fasso, director, international, in a recent interview.
The tie-up came ready made in Australia, where AMP Ltd., the firm’s 85% owner, is the country’s largest wealth manager and financial services group, said Mr. Fasso.
The remaining share is held by Mitsubishi UFJ Trust & Banking; the Tokyo-based giant purchased 15% in March 2012 to cement a strategic partnership with AMP Capital for the Japanese market.
More recently, AMP Capital has deepened ties with Beijing-based China Life Insurance Co., launching a fund management company joint venture in September 2013, followed by parent company AMP Ltd.’s October 2014 purchase of an almost 20% stake in subsidiary China Life Pension Co. Ltd., the largest competitor in that country’s corporate “enterprise annuity” market. Both the joint venture and the pension company are based in Beijing.
The company’s approach amounts to what could be referred to as a focused global strategy.
“We don’t want to be in every country in Asia or the world,” said Mr. Fasso, citing Japan, China, Europe, the U.S. and South Korea as leading business opportunities for his firm.
And “rather than trying to take on the world in every asset class,” AMP Capital is very focused on a “real-asset story: property, infrastructure, listed and unlisted, debt and equity,” he said.
In Europe and the U.S., AMP Capital has been enjoying organic growth without the help of tie-ups with financial powerhouses. The strategy of forging “big, big partnerships” — first with Mitsubishi UFJ, the biggest financial conglomerate in the world’s second biggest savings pool, and then with China Life, the biggest life insurance company in the world’s “most interesting future savings pool” — has been “confined to Asia,” he said.
Australia’s other big asset management firms — led by Macquarie Asset Management and First State Investments — have also built up their presence overseas in recent years, but AMP Capital’s reliance on big partnerships, and its relative focus on the institutional marketplace, is a differentiator, said Mr. Fasso.
Ian Martin, Sydney-based vice chairman, Asia Pacific, with investment bank Berkshire Capital, New York, said Mr. Fasso and AMP Capital should be given some credit for “thinking outside the box” in pushing overseas. The Japanese deal in particular seems to be working “quite well for them,” while getting a foot in the door in a fast-growing pension market in China that is subject to considerable regulatory change could prove a “very smart move,” he said.
Mr. Fasso said Mitsubishi UFJ Trust & Banking’s status as “the biggest manager of pension assets” in Japan, in addition to doing custody, record keeping and some level of fiduciary management, has provided AMP Capital with substantial access to that country’s pension fund clients, public and private. While AMP Capital had been doing business in Japan for more than a decade, he said the tie-up has led to “a lot of success,” particularly when it comes to infrastructure debt funds, where Japanese clients “have led the world” in allocations. He declined to provide specific numbers ahead of AMP Ltd.’s pending announcement of its 2014 results on Feb. 19.
Infrastructure debt is a story “where Asia has led the rest of the world,” with South Korea and China on Japan’s heels as top investors in that asset segment, he said.
The tie-up with Mitsubishi UFJ has helped boost AMP Capital’s assets under management on behalf of clients based outside of Australia and New Zealand to 15% of the firm’s total AUM of A$145 billion (US$126.5 billion) as of Sept. 30, up from roughly 5% only five years before, he said.
The firm’s more recent tie-ups with China Life haven’t had a similar impact yet, but that’s just a matter of time, Mr. Fasso predicted.
AMP Capital’s money management joint venture with China Life had a “phenomenal first year,” starting out as 90th among 90 fund management companies, in terms of AUM, at its launch but ending the year among the top 40, after bringing out money market, fixed-income and equity fund offerings.
The pension company tie-up, meanwhile, will be launched this year as soon as the venture is formally approved by China’s government.
With those new engines of growth in play, “our international business will be very, very strong in the next couple of years,” particularly with the contributions from Japan and China, he predicted.