Aviva Investors chief executive explains Singapore move.
2040 may be three decades out but by then Singapore should have established itself as the leading asset management hub in Asia, according to PriceWaterhouse Coopers. When the asset management division of Aviva, the world’s sixth largest insurance company, announced in August its decision to commit to building a regional hub there, Singapore’s project advanced significantly.
Aviva Investors is to carry out product manufacturing and portfolio management in the country. This is a deployment of skill that will please Singapore’s authorities no end in their competition with Hong Kong – where Aviva also has business – to build capability in financial services.
However, Aviva is one of the largest life insurers in Singapore and Erich Gerth, the asset manager’s Asia Pacific chief executive, acknowledges the importance of this to the choice of regional base. And he acknowledges the allure of Hong Kong given its proximity to China, where Aviva sees much of its growth coming from in the region, along with India.
“Aviva Investors established the business in Singapore to support the life company, as well as to externalise that capability in building an external client base,” said Gerth, an American who has an Asian-focused MBA from the National University of Singapore.
Aviva Investors had essentially relocated from Australia after its parent sold an insurance business there in October 2009 and Aviva Investors sold off its Australian equities business earlier this year.
“Singapore and Hong Kong both have advantages. Hong Kong’s attractions are its proximity to Shanghai, Tokyo and Taiwan. But Singapore is good for expansion plays in India and Australia.
“The private banks here are attractive to us too. A number of them are creating an Asian servicing hub in Singapore and the government wants to make Singapore both a private banking and an investment management hub. So the clients are here and the government is serious. This offsets any geographic advantage Hong Kong may have.”
Aviva Investors has a qualified foreign institutional investor licence, allowing it to invest in mailand China’s A share market, and is awaiting approval for a joint venture in asset management with Central China Securities.
The Singapore office will oversee this and other Asia Pacific business.
Gerth was announced as Asia Pacific chief executive in August. He also continues as chief executive of global business development.
He will be hiring for a number of roles in the region to build on Singapore’s 50 staff.
“We want to build up business development and will add to portfolio management over time,” he says.
Gerth adds that he wants also to create product manufacturing units around other parts of Asia too, including China.
“Over the last three years we have been externalising what had been carried out internally and globalising what had been carried out locally. In Asia Pacific we’ve been selling products that have been manufactured in other parts of the world.”
However, the business – which has $4 billion (€2.9 billion) in assets under management in Asia – is now more a ‘two-way street’.
“A unique product we have which is managed here but sold into the UK is the Asia Pacific property fund. It is an Oeic and the only fund of its kind with daily liquidity.”
The real estate and insurance business form a gravitational centre for Aviva Investors in Singapore. But equities and fixed income teams were also set up early this year.
Aviva Investor’s unique selling point, says Gerth, is that it services an insurance company with around £400 billion (€467 billion) of assets.
“You have to be very responsive to meet the needs of a client like that. That drives a need for product development.”
And this impetus should help support product development for other clients.
“We can take an off-the-shelf product and fully bespoke it. Not a lot of firms can do that.
“A good example was the Global Brands Fund launched in Taiwan, which is all about the brands that will do well in Taiwan. The capability for this fund is based in the UK, but after discussions with First Securities [a Taiwanese brokerage] we were able to create a product for Taiwan under their name.”
©2011 funds global