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SINGAPORE: Aviva Investors, the fund management arm of the British insurer Aviva, is planning to set up a regional asset management unit in Singapore.
It is targeting to manage at least US$3 billion in assets out of Singapore within three years.
The firm currently only has a small operation in Singapore, which largely handles real estate investments of about US$150 million.
Aviva Investors is taking some big steps to grow a presence in Asia. It believes the timing is right to expand because it is in a relatively stable position coming out of the crisis.
Its top focus is to grow a base in Singapore. This involves hiring 30 people to build up its capabilities for equities and fixed income investment.
Aviva Investors now has a dominant presence in Europe. Its current presence in Asia is relatively small, with operations mostly out of Australia.
Craig Bingham, CEO, Asia Pacific, Aviva Investors said: "In Asia, we are looking to create three centres of excellence. One in Singapore - we already have one in Australia - and we are looking for China as well. So we are going to look at those three centres in order to create an asset management centre of excellence for each of them.
"And then, we will look at other distribution opportunities within Asia - where we see the group as an opportunity to go out and distribute products that might be manufactured locally, or may in fact be manufactured in other parts of the group."
Aviva is looking to expand its existing sales in Taiwan and Abu Dhabi in the future. And it is also eyeing markets in Japan and Saudi Arabia, where it plans to open sales offices.
Mr Bingham said: "In addition to Singapore and China being of significant interest, we are looking at places like Japan.
"We think that even though the economy may not be looking too good, there is an enormous amount of wealth there and the focus of the individual tends to be on high yield, on property and on sustainability issues - all key strengths of what Aviva Investors can offer from around the world."
Aviva expects these regional distribution arms to help boost current assets managed out of Singapore by 20-fold, to at least US$3 billion. Aviva Investors' current operations in Singapore handle mainly real estate investments totalling about US$150 million.
Aviva said there has been growing interest among its clients to move more funds to Asia. The firm now manages about US$400 billion in assets, of which only US$20 billion is invested in Asia.
And given lingering market uncertainties, Aviva expects investors to lean towards products that ride on volatility.
Mr Bingham said: "Bearing in mind that some of the crises that we faced last year haven't necessarily been solved, we have converted private debt into public debt. At the end of the day, we have seen some markets being very volatile against that backdrop.
"I think you will continue to see a lot of long-short funds, absolute return focus, (and) identification of structured products. Property being real estate and the pursuit of high yields will all still be areas that clients will look for.
"The point of differentiation though will be they will no longer go into something that is not transparent. One of the great lessons that we learnt from the washout of last year, is the need for transparency and understanding in everything that you go into."
Aviva Investors said it remains open to acquisitions but will prefer to grow organically. This is due to the higher risk and cost of buying existing firms.
One market that Aviva Investors is holding back on committing resources to is India.
Mr Bingham said: "I have been looking at India for the last three years, and you look at demographics and it is exciting, isn't it? At the end of the day, I think there are some great lessons to be learnt from all those who have gone before us, in how to actually extract a very very profitable business.
"The real secret is how you get distribution right. For an asset manager as well, what we have seen in the past is very low account balances, very high turnover, and an infrastructure that requires quite an expense. And so those three things together makes for a less than profitable entity in a reasonable period of time.
"So until I can identify a way of actually producing something that can yield a more robust business within a moderate time frame of five to six years, then we will continue to watch.
"While we have looked at a number of opportunities, we continue to find it difficult to see how we can build a long term robust sustainable business there. So we are not pursuing it at the moment, but we will never say never, and we will continue to keep our eyes on opportunities that might present themselves."
- CNA/sc
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