Eastspring buys 65% stake in TMBAM
Eastspring Investments, an asset management arm of Prudential Corporation Asia, will focus on the mass market and investment units in Thailand’s provident funds after acquiring a 65% stake in TMB Asset Management (TMBAM).
The company is one of the largest foreign asset management companies in Thailand following the acquisition. Asset under management (AUM) of TMBAM total 430 billion baht, ranked fifth among asset management companies in the country.
TMBAM’s AUM grew by 26% per year between 2013 and 2017, higher than the industry average of 13%.
The company’s market share stands at 8% in the mutual fund industry and 2% for the provident fund industry.
As of March 31, TMBAM had over 400 branches nationwide and 6.4 million retail customers.
Eastspring Investments chief executive Guy Strapp said provident funds is an investment segment with high potential growth in Thailand because it remains small, with around 80% of employees working for small and medium-sized enterprises in need of good savings for retirement.
These employees still do not have investment in provident funds, which offers a growth opportunity for the company, said Mr Strapp. The penetration rate in the Thai mutual fund industry also remains low at 35% compared with 96% in developed countries, he said.
But Thais have good savings habits, with assets in the mutual fund industry at around 5 trillion baht, among the highest rate in the region, said Mr Strapp.
Eastspring Investments plans to introduce secured and sustainable return products for the Thai market, comprising corporate bonds, equities, fixed income funds and other global investment products offering better returns, he said.
Mr Strapp would not mention the company’s AUM target in Thailand, only stating that AUM growth and TMBAM’s market share will continue to improve.
Thailand is the 11th Asian country for Eastspring to expand its footprint. The company’s AUM tally US$200 billion (6.5 trillion baht).
Nic Nicandrou, chief executive at Prudential Corporation Asia, said Prudential is considering changing the name of TMBAM, with an aim of identifying with both global and domestic partners. The new name is expected to be disclosed by this year-end, said Mr Nicandrou.
But the management structure of TMBAM will not be altered as the current team has performed well, indicated by the company’s AUM growth of 26% last year, he said.
Mr Nicandrou said Eastspring Investments has an option to increase its stake in TMBAM to 100% over the next three years, while TMB Bank will continue to support the business through a distribution partnership and investment sales agents.
“Of the Thai mutual fund industry’s AUM of 5 trillion baht, some 1 trillion is invested in overseas markets. Our partnership with Eastspring will help in this regard and generate the most benefit to our clients in the future,” said TMB Bank chief executive Piti Tantakasem.