Credit Suisse Group AG, which sold its Japanese asset management unit in June, will offer alternative investments including private-equity funds to attract the nation's US$800bn in pension money.
Tokyo-based Credit Suisse Securities (Japan) Ltd., the Japanese brokerage unit of Switzerland's second-largest bank, won approval on Oct. 2 from Japan's Financial Services Agency to act as an investment management firm, according to Akira Takahashi, the head of the brokerage's asset management group. The unit in August hired BlackRock Inc.'s Shinichiro Sato to head a six-member investment team, Takahashi said.
The move to meet Japanese investors' demand for higher- yielding and diversified assets comes after Credit Suisse sold its asset management unit to Aberdeen Asset Management Plc in June to stem losses. Credit Suisse's Japan asset-management arm had about 31 billion yen ($345 million) under management when the sale was completed.
"The Japanese pension-fund market has always been the brass ring for alternative fund managers in Asia -- the roads leading into them are, no-doubt, still crowded with contenders," said Kirby Daley, a senior strategist in Hong Kong with Newedge Group's prime brokerage business. "I expect interest in alternatives from the pension funds in Japan will be high in the coming environment."
A survey of 79 Japanese pension funds by JPMorgan Asset Management (Japan) Ltd. in April found that 35 percent of them planned to make new investments in alternative assets such as hedge funds, more than any other asset class, including stocks and bonds.
"It's going to take time to rebuild and win back investors," Takahashi, 48, said in an interview in Tokyo today. "To capture clients, we aim to make our alternative funds the pillar of our offerings to set us apart from competitors."
Credit Suisse plans to offer so-called secondary funds, which allow investors to buy into private-equity assets initiated by other investors. It will also offer private-equity fund of funds investing, Takahashi said.
Financial firms crippled by the worst market rout since the Great Depression are unloading stakes in private-equity funds, creating opportunities, Takahashi said. He cited the California Public Employees' Retirement System's move to sell private- equity partnerships and instead invest in secondary funds. Calpers is the U.S.'s largest public pension fund.
Credit Suisse also expects Japanese pensions to become more selective in finding "outperformers" leading higher demand for single-manager hedge funds over fund of hedge funds arrangements, Takahashi said.
Exchange-traded funds that track commodities, emerging markets, U.S. indexes and hedge-fund benchmarks may also be among the offerings, he said. ETFs track benchmarks and allow investors to buy and sell entire portfolios of stock in a single security.
Credit Suisse in December agreed to sell a stake in its Global Investors business to Aberdeen in a stock transaction valued at 250 million pounds ($398 million). The sale came after the Swiss bank said it plans to eliminate 11 percent of its total workforce and scrap bonuses. Credit Suisse posted a record loss of 8.2 billion Swiss francs ($7.9 billion) last year.
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