Mark Konyn, chief marketing officer at Dresdner RCM Global Investors in Hong Kong, chats with FinanceAsia about the firm's direction as it gets used to life as part of Allianz Group following last year's acquisition.
FinanceAsia: Did this deal involve much overlap?
Mark Konyn: Hardly any. The acquisition was announced in March and the outline for integrating the two firms was made in September. In Asia, Allianz has a burgeoning insurance position and is taking advantage of market openings. Its regional headquarters is in Singapore. But in asset management in this region, Allianz's business is still pretty new. Even globally, asset management has been a separate function for just two years. But Allianz has also made a number of acquisitions, including Pimco, a $250 billion fixed-income manager; Nicholas Applegate, which is a growth-strategy equities manager; and Oppenheimer Capital, a value manager.
In fact Allianz' strategy has been similar to Dresdner Bank's in the early 1990s, when it acquired money managers such as RCM and Kleinwort Benson's fund management business û and when Dresdner concluded that in order to be effective, it had to integrate these resources into a single platform. Dresdner completed that in 1997 with the establishment of Dresdner RCM Global Investors for international operations, and then in 1999 with DIT, under which we integrated the domestic German mutual funds business.
We successfully consolidated first the skill sets and then the distribution, and you see the same elements at work behind Allianz buying Dresdner Bank in Germany. Now Allianz has both the insurance and the bank networks. This has been in part driven by tax rule changes in Germany that now allow the unwinding of strategic shareholdings, and Allianz had been a long-time stakeholder in Dresdner Bank.
There is little overlap between the two firms, because in terms of client services and marketing, Allianz had only just begun to grow its fund management business. But they do have investment skills in managing portfolios for insurance companies, for example, or highly risk-controlled portfolios. In Asia they also have a domestic Australian equities team, which Dresdner RCM didn't.
To what extent are your businesses now integrated in Asia?
The two offices are now co-locating in Singapore, as has already been done in Hong Kong. That means they share the same office and do business on a single license, but until Allianz formally acquires all the last Dresdner shares, German regulations stipulate they are not a single legal entity. We are under the same roof but we can't change our names yet. I don't know when that will happen, or whether the Dresdner RCM name will remain. Allianz has been spending a lot of money on brand building, and we will need to identify ourselves as part of the Allianz group.
Is Bruce Kho, the managing director at Dresdner RCM here, still running asset management?
Bruce is now CEO for the region including Australia but not Japan. He reports directly to the senior management in Munich and Frankfurt. I am chief marketing officer. We have two co-CIOs, Raymond Chan in Hong Kong and Ian Lui in Singapore, who looks after about $5 billion for the insurance clients, where there is a preference among clients to manage the investments in Singapore. Raymond is responsible overall for the investment process. I imagine if we are successful in building our product lines, we will keep this structure. Dresdner RCM now runs $8 billion globally on behalf of clients from Asia in addition to the $5 billion Ian handles for insurance clients.
What about Bernd Gutting, who was the Allianz MD in Singapore?
I understand he has transferred back to Germany. Ian Tham is now managing director in Singapore for Allianz Group; he was previously an MD at Dresdner. In Sydney, Peter Rayner is group CEO, while Hsien Chiang runs our Site operation in Taiwan and Rita Hsu runs our Sice. And our regional head of research is Adrian Cundy in Singapore.
How does Allianz approach fund management?
Insurance and fund management within Allianz Group are separate business groups. Allianz is in fact one of our clients. But there will be opportunities to work together on unit-linked product, for example.
What will be your biggest priority for business development in the region this year?
China is a big priority. The foreign joint-venture regulations are immanent, and we are working very closely with our partner, Guotai Junan Securities. First of course our JV will need a fund management license and we will have to meet whatever requirements that poses.
Who will have management control of the fund management JV?
Issues such as ownership of the JV have yet to be decided. But we have been working together since 1997. In general, the local partner has local investment management expertise and the foreigner introduces international standards for compliance, risk management, etc. I think for foreign companies now trying to find partners it is a tough challenge, because the ones left don't have the expertise and will have to rely more on the foreign partner, who won't know anything about domestic bond markets or A shares. But Guotai Junan has professional management, a good brand, strong distribution, and so on.
Some of your competitors, by teaming up with a domestic fund manager as opposed to a securities company, have been able to test the relationship by working together on open-ended mutual fund launches. Do you have similar projects you can work on with Guotai Junan?
There is as you say no open-ended mutual fund to work on. But our goal is to capture domestic savings, whether through open-ended funds or from retirement monies û from the government or companies starting retirement schemes and outsourcing fund management. I'd say the open-ended funds are more immanent. Guotai distributes closed-end funds but open-ended ones are different, so Guotai managers have been in Hong Kong visiting us, or in Germany at DIT, to understand things such as fund administration.
What's your informal timetable for getting the JV off the ground?
I think it will take 12 months to get a fund manager's license and launch our first products. There is a sense of urgency at the CSRC to move the industry forward.
