Build-out behind GSAM move to bolster Asia leadership

An ambition to better resource its Asia-Pacific expansion appears to be behind Goldman Sachs Asset Management’s move to relocate Sheila Patel to the region as head of its ex-US business, as reported.

Effective immediately, she takes day-to-day operational responsibility for the business in Asia-Pacific ex-Japan, although she is not expected to land in Singapore until the start of next year.

Hitherto she has been based in London as co-head of GSAM for Europe, Middle East and Africa along with Andrew Wilson. She will retain responsibility for distribution-related operations in Emea, while Wilson becomes sole head of the business there.

Oliver Bolitho (pictured), who has been running GSAM’s Asia operations for the past five years, takes on a new role as chairman to focus on relationships with its most important regional clients, which are largely institutional but also include a number of big regional banks and insurance companies.

The thinking is clearly to split the management remit for Asia-Pacific ex-Japan between business administration and the long-term interests of clients.

As one senior industry source tells AsianInvestor: “The right interpretation of this move is that Goldman has expanded its efforts here in Asia and it needs a deeper bench of leadership.

“The stretch of managing businesses from Mumbai to Melbourne and at the same time driving the developments of relationships with the firm’s most important clients is something that needs more than one person to do.”

Evidently GSAM has placed greater weight on Asia. In 2008 it had $75.6 billion in Asia-Pacific-sourced assets, 10% of its $757.7 billion in global AUM at that time, by AsianInvestor numbers. Today it has $97.2 billion in Asia-Pacific sourced assets, out of $735.5 billion globally.

In other words, while its global assets have shrunk almost 3% since the dark days of the global financial crisis, its assets sourced from Asia-Pacific have soared more than 28%.

During that period, GSAM has completed a business build-out in Korea (which it recently reversed), made acquisitions in Australia (a residual business) and India (Benchmark), launched an active equity strategy domestically in India and reintegrated its Japan business.

The source adds: “GSAM has had a strategic review given its decision to withdraw from Korea. The degree to which it continues to assess its regional footprint, that will be one of Patel’s primary agenda items.”

GSAM is known to be looking to capitalise on opportunities in product distribution, having not had a significant retail presence in the region outside of Japan and Australia up to now.

Sources confirm it is intent on building out in sub-advisory and third-party distribution, particularly in Hong Kong and Singapore, having built a team in 2011 and started to launch products tailored for Asian clients. These are a real estate balanced portfolio, Asian high-yield and a book of corporate paper featuring some distressed and restructuring plays.

“This is the first year that GSAM has pursued that approach of taking the temperature of the Asian audience, building to a local brief and launching product against that,” says the source.

“It has been working much more closely with its own private bank to better understand client needs and make product for them, which is not something it has done before.

“The ability to build out in the retail space and to get product out into the markets through the bank channel is going to be a very big focus for the firm.”

Part of this local manufacturing build-out is with an eye on China, on the understanding the Chinese authorities will be more accommodating in future to Asian products as opposed to their Ucits cousins. It is one reason behind BlackRock also seeking to build local fund manufacturing from Hong Kong, as reported.

One channel where GSAM is understood to be expecting development is Asean, given the potential of the funds markets in Malaysia, Thailand and Indonesia.

“GSAM is not licensed in Indonesia today, for example, but with the right partner and through the right banks, if it can make the right product for distribution, the door is open,” the source adds.