By Joe Marsh
Following a review of its Asian business, Morgan Stanley Investment Management has reorganised its regional team and is expanding its product range with a view to trebling its regional assets under management.
With AUM standing at $34 billion as of late 2010, MSIM hopes to be managing at least $100 billion of Asia-Pacific investors’ money in the next three to five years. That compares to the firm’s plans – announced in early 2010 – to double its global AUM, which was $296 billion as of June 30.
One major area of focus for the firm is private equity. MSIM has invested around two-thirds of its $1.5 billion Morgan Stanley Private Equity Asia III fund and aims to have it all invested next year, says Navtej Nandra, London-based chief executive of MSIM’s international business. The firm’s Asia PE performance ranks among the top handful of funds in Asia, he tellsAsianInvestor.
MSIM will be in a position to raise money for its fourth Asia PE fund in the first half of 2012, which is likely to be a similar size to the current product, he adds.
“The opportunity to raise private equity money exceeds what we will target,” says Nandra, “but we are disciplined in our investment approach and will continue to invest at a steady pace. In the current climate, we see attractive opportunities in a number of key countries such as China, India, Taiwan and Korea.”
Meanwhile, in May MSIM launched a renminbi-denominated PE joint-venture fund with Hangzhou Industrial and Commercial Trust, aiming to raise Rmb1.5 billion ($235 million). “Initial demand from Chinese investors has been encouraging, and we expect the initial close to be in the fourth quarter of 2011,” Nandra adds.
“The investor base for alternative assets is developing rapidly in China,” he says, “and we expect both institutional and high-net-worth individuals to show interest in this product.”
Within MSIM’s traditional asset management business, one of the fastest growing areas in the region is its onshore local-currency funds business in China and India, says Nandra.
Morgan Stanley Huaxin Fund Management in China has a headcount of close to 100, and Morgan Stanley Mutual Fund in India has 50 to 75. Those staff are spread across the main hubs and sales offices in each country.
“In the domestic long-only markets in India and China, you will definitely see growth in our local footprint and in product manufacturing,” says Nandra. “We expect to launch two to four products in China and India each year, and to support that we will continue to build out our investment teams steadily.”
In addition to its infrastructure, long-only, PE and property investment businesses, MSIM also offers money-market and fund-of-fund products in Asia. “We are one of the few firms to have a footprint in all those asset classes across multiple countries,” notes Nandra.
MSIM has had stable regional investment teams in place for some time, but it needed to bolster its sales and marketing headcount, says Lisa Jones (pictured), who joined as global head of sales in New York in July 2010.
Hence the headcount has grown in that area in the past year. The most recent Asia-Pacific hire is Kikuo Kuroiwa, who joined in July as Japan head of institutional sales to replace Chiharu Furukawa. He was previously president at Bank of Ireland Asset Management in Tokyo.
Beyond Japan, MSIM split the region’s sales coverage into two following the departure of Asia CEOBlair Pickerell and Asia head of sales and marketing Sandra Leelast year.
Gokhan Unal, who joined MSIM as head of Middle East sales at the end of 2010, has taken on a wider role as Singapore-based head of South Asia. Inma Diaz runs North Asia out of Hong Kong, a role she took up late last year, still maintaining her focus on China business development.
In addition, three sales professionals joined MSIM in September. Stanley Chan is now head of Hong Kong business development, and was previously a sales professional at Wellington. Sheila Tan becomes head of Taiwan business development, having previously held a similar role at Threadneedle. And Shu Mei has assumed a senior business development role focusing on China, having moved from Natixis Asia.
The regional sales team is now complete, says Jones. “We are in all the anchor markets where we need to be, as well as in some developing markets,” she adds.
There may be some additions in markets where the company already has a presence in the next two to three years, particularly for the local China and India teams, but there is unlikely to be hires into any new markets in that time.
Meanwhile, MSIM has been boosting its investment headcount in Asia this year, including adding a fixed-income portfolio manager in India and an equity PM in China, but it declined to name them or confirm whether they replace anyone. The firm has also added two equity PMs in Singapore –Ashutosh Sinha rejoined in February for the Emerging Leaders strategy and Hisayoshi Takahashi for Japan equities.
Moreover, in August the firm relocated Olivier de Poulpiquet, global co-CEO and co-chief investment officer of Morgan Stanley Real Estate Investing, to Singapore from London. Alongside his global duties, he will help Hoke Slaughter, Asia-Pacific head of that business, cover the region.
This move reflects the importance of Asia to MSIM, as does the fact that the Asia head of Morgan Stanley Global Infrastructure, Gautam Bhandari, is based in New Delhi.