Last year, Amundi took a majority stake in KBI Global Investors, with the management retaining 12.5%. How is the new relationship working out?
The process has gone very well, and both the client and the consultant reaction has been strong. One of our main aims was to have a strong parent with a reputation within asset management, which we haven’t had before.
From the perspective of the 12.5% stake, again that’s something that has been received very well by the market, as now there is significant direct alignment between staff and the future direction of the business.
While that alignment existed before in the case of a profit share, which has been maintained as part of the new structure, it has been supplemented by direct ownership, which is the preferred mechanism consultants like to see ownership in the firm.
The first priority was to maintain clients and consultants, ratings and client assets. That has been achieved well and the reaction has been very positive in the meetings we have had with consultants.
The second leg we are just beginning is to build on one of the opportunities Amundi brings us, meaning larger distribution capabilities in areas where to date we haven’t had strong numbers of people.
We’ve had success, but without a large sales force. We are trying to combine two elements: the success we’ve already had in Europe and Asia, with the powerful distribution force Amundi brings with it.
We have assets from some of the largest owners in the world, such as the Korean National Pension Scheme, so we have the pedigree and the track record, but now we can drive that forward with the Amundi engine.
What freedom is Amundi giving you in terms of running the business?
Amundi gives us absolute freedom because they recognise that the success of the business is built upon that strong autonomous structure we had in previous ownerships.
Under our three previous ownership structures, we always maintained an autonomous structure, with oversight and board management from the parent.
They have allowed us to decide where and when, and how much we’re going to distribute our products across different regions.
For North America and the UK we have a standalone model, because that is where we have the most resources and where we have built up the bulk of our business. For instance, 50% of our assets are in North America, where we are already established, so there will be very little if any overlap or help from Amundi there.
We have 20% of our assets in Asia and 20% in Europe including the UK. That’s where Amundi has resources we can leverage in terms of sales people and existing clients, so we will work more closely with them there.
In the Middle East we currently have zero penetration or clients, so we will use Amundi there almost exclusively.
We will have a roadtrip in the first quarter of 2017 when we will go with Amundi to different clients they have and prospects they’re trying to gather.
What types of distribution are we talking about in these different regions?
Our current mix is 60% in traditional institutional and 40% in wholesale distribution. Within our wholesale institutional relationships, we would describe many of those as institutional in the way they operate, where we are appointed as a single sub-adviser or as one of a number of sub-advisers to a large private bank, for example.
We see a definite ability to work with Amundi on the institutional side, where we can either do segregated mandates or unitised products effectively with them.
On the distribution side, Amundi has many in-house partners and joint ventures, with the Agricultural Bank of China and the State Bank of India for instance, which are very exciting potential distributors for us to work with, but it’s still early days.
What percentage of your assets under management comprise family offices, high-end wealth managers and bigger IFAs?
It is somewhere between 5-10%. Not having a large sales force, we don’t have the ability to meet individual IFAs. The UK is a good example of where we’ve effectively outsourced that business to Cohesion, a specialist fund distributor that works with the individual IFAs and private banks. The model of us working with third-party distributors has already been well established.
We have a similar arrangement in Australia where we outsourced to a company called Ambassador and they bring us to markets. We can now apply that approach to the Amundi relationships, albeit they are all part of the one group.
Are you keeping the brand, given Amundi is now involved?
We were formerly Kleinwort Benson Investors, so we felt it made more sense to keep the KBI because clients know us as that.
At the same time, we are a small asset management group so we’re not going to ever have deep enough pockets to globalise a brand. It made most sense for us to keep a brand that was at least recognisable to our existing clients, consultants and some of the people we call up. We’ve added to that two important words, ‘global’ and ‘investors’, hence KBI Global Investors.
Is Dublin an adequate base in relation to Asia and the Middle East, when Jersey or Luxembourg tend to fit some of these markets better?
We have a well-established use of the Dublin domicile, with the ability to use those funds across Asia, Canada, Europe and the UK. We have a ready-built fund structure that contains all the strategies we can use. Amundi uses a Luxembourg Sicav but we don’t have any plans to adapt that.
In terms of Dublin and our reach in Asia and the Middle East, that’s where we recognise what Amundi brings us in having local presence in the right time zones and in speaking the right languages. That is a huge positive we haven’t had before. We can keep the people and the manufacturing in Dublin but now significantly supplement it with resources in the markets where we are active.
