DBS asset management acquires 7.25% interest in Nikko asset management

Nikko Asset Management will obtain DBS Asset Management for S$137 million in their signed agreement to combine both asset managements.

DBS said that the combined firm will manage over US$150 billion and will be one of the largest asset management companies in the Asian region. This combined investment management platform will offer an increased scope of products and capabilities to better enable DBS and Nikko AM to strengthen their asset management proposition to meet the needs of Asia’s burgeoning affluent population.

DBS will acquire a 7.25% interest in Nikko AM to allow them to participate in the future growth of the combined business.

By taking a strategic minority stake in Nikko AM, DBS will be able to realise substantial value by joining forces with a top player in the industry in Asia. Nikko AM, meanwhile, will look to leverage the strength of DBS’ regional networks to further consolidate its standing as a leading Asia-based asset manager.

Enhanced Geographic Reach and Scope of Offerings
As part of the transaction, DBS and Nikko AM will enter into a non-exclusive distribution agreement through which Nikko AM’s portfolio of investment products can be distributed through DBS’ network of core markets in the region.

Piyush Gupta, Chief Executive Officer of DBS, said: “Asia is creating wealth faster than anywhere else in the world and as a bank born and bred in this region, we are well-placed to tap this growth. The tie-up with a partner like Nikko AM, that shares DBS’ deep commitment to Asia, will enable us to build scale, while leveraging DBSAM’s investment and structuring capabilities. The combined platform will be an excellent source of product manufacturing, sales support and training, and with our expanding presence in Asia, it will also benefit from DBS’ extensive distribution network in the region. This is yet another step toward executing against our strategy to build a top-notch Asian wealth management franchise.”

Tim McCarthy, Chairman and Chief Executive Officer of Nikko AM, said: “With its first-rate investment team and extensive regional network and knowledge, DBSAM will be a strong strategic fit with Nikko AM as we reinforce our position as a leading and cutting edge investment management firm in the region. We particularly look forward to working with DBS to offer an exciting range of investment funds to their clients and to support DBS’ plans to grow its wealth management business throughout the region.”

Hitoshi Tsunekage, President and CEO of STB, the parent company of Nikko AM, said: “We are extremely pleased to be welcoming DBSAM as a member of the Nikko AM Group, and at the same time equally delighted that DBS is taking a stake in Nikko AM. By expanding its distribution network and investment platform in Asia, especially in Singapore and Hong Kong, Nikko AM has taken a major step toward becoming the region’s leading investment manager. The move is aligned with our overall group strategy, which aims to strengthen asset management operations in Asia. We look forward to combining the strengths of our group and those of DBS in the Asian asset management sector and other business areas.”

Deborah Ho, Chief Executive Officer of DBSAM, said: “The growth momentum in Asia will generate significant business opportunities for DBSAM and Nikko AM. Together, we will be able to broaden the breath and depth of our services and develop more innovative products for new and existing clients. We look forward to joining the Nikko AM family as we accelerate the growth of our investment management business in Asia.”

Scope, Governance, and Deeper Talent Pool
Under the terms of the agreement, DBS will inject into Nikko AM:

• its Singapore asset management subsidiary;
• its 30% stake in HwangDBS Investment Management Berhad, Malaysia’s leading independent fund management firm;
• its 51% stake in Asian Islamic Investment Management Sdn Bhd (the other 49% of which is owned by HwangDBS Investment Management); and
• its Hong Kong fund management subsidiary.

The combined assets under management of these entities as of September 2010 total US$7 billion.

Changsheng Fund Management, a Chinese affiliate 33% owned by DBSAM, will not be part of the transaction and will be held directly under DBS Group subject to regulatory approvals. DBS’ relationship with Changsheng is an important step in executing the bank’s strategy to capture more RMB-related flows and building integrated banking solutions for Greater China.

As part of the transaction, DBS will have representation on the boards of Nikko AM and Nikko AM’s Singapore subsidiary. This will allow DBS to participate in the governance of the business and to continue to ensure that the needs of its clients are being met.

Subsequent to the transaction, Nikko AM will complement its talent pool with the addition of all 107 staff from DBSAM.