Nikko AM becomes Asia’s largest manager after M&A

Nikko Asset Management has become the largest investment manager headquartered in Asia by buying outright its rival DBS Asset Management, for an undisclosed sum, from DBS Bank.

The deal boosts Nikko’s assets by about $8bn, to about $165bn.

DBSAM Singapore is to be renamed Nikko Asset Management Asia Limited around mid-October.

Employees of Nikko AM’s Singapore subsidiary – Nikko Asset Management Singapore Limited – will move to DBSAM over the next few weeks.

DBSAM has expertise spanning Asian equities and fixed income, each of growing interest to allocators in the region who typically now face negligible interest rates and stagnant economic growth in their portfolio of Western world investments.

As part of the transaction DBS has acquired a 7.25% stake in the enlarged group. The majority stake is held by The Sumitomo Trust & Banking Co.

The deal does not include DBSAM’s 33% stake in Chinese fund manager Changsheng Fund Management, which has been transferred to DBS Bank.

But the deal does signal a strategic alliance between DBS Bank and Nikko AM.

Through it, Nikko AM adds a non-exclusive bank distribution channel in the region, while DBS can expand its offerings.

Timothy McCarthy (pictured), chairman and CEO of Nikko AM, said: “We look forward to working with DBS to bring innovative Nikko AM investment products to their customers across the Asia-Pacific region.”

This mutually beneficial arrangement is similar to deals that European wealth managers Reyl & Cie and Principal Global Investors struck earlier this year with emerging markets specialists.

Also included in the Asian deal are Nikko AM taking a 30% stake in Hwang-DBS Investment Management Berhad, an independent Malaysian fund manager; a 51% stake in Asian Islamic Investment Management Sdn. Bhd; and all of DBSAM’s Hong Kong subsidiary.

Separately, Nikko AM already has a 40% stake in a joint venture Chinese investment management company, Rongtong Fund Management.

The expanded Singapore office DBSAM brings to Nikko AM complements existing presence in London, New York, Singapore, Hong Kong, and various Australian cities.

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