December 7, 2017 6:22 pm JST

Singapore's Fullerton doubles portfolio with NTUC Income tie-up

Move will create a major regional asset manager

SINGAPORE (Nikkei Markets) -- A fund manager owned by Singapore state investor Temasek Holdings is set to become one of the largest locally owned asset management companies following a de facto merger with the asset management operations of insurer NTUC Income.

Under the terms of the proposed strategic partnership announced on Thursday, NTUC Income will appoint Fullerton Fund Management Company as the investment manager of a portfolio worth an estimated 23 billion Singapore dollars ($17 billion).

NTUC Income, one of Singapore's largest general and life insurance companies, will also get a "significant minority stake" in the Temasek-owned asset manager as part of the deal, the joint statement said.

The move will double Fullerton's assets under management, or AUM, to over 40 billion Singapore dollars, putting it in the same category as the big players in Southeast Asia, such as the fund management arms of United Overseas Bank and Oversea-Chinese Banking Corp.

UOB Asset Management had around 30.4 billion Singapore dollars at the end of December 2016, while Lion Global Investors, a member of the OCBC group, had around 45.1 billion Singapore dollars at the end of June this year. DBS Group Holdings, Singapore's largest banking group, does not have an asset management arm.

Asset managers around the world have been merging their operations to gain scale and lower costs amid increasing competition from passively managed exchange traded funds, which typically charge a fraction of the fees. Earlier this year, Standard Life and Aberdeen Asset Management completed an all-share merger to create the U.K.'s largest fund manager with some 670 billion pounds ($871 billion) in AUM.

"Income is always looking out for opportunities to create more value for our policyholders," said NTUC Income's chief executive officer Ken Ng in a statement. Ng said the proposed partnership would allow both parties to gain economies of scale.

Fullerton is an Asian and emerging market specialist, with investment capabilities that span equities, fixed income, multi-asset and alternatives. It was originally the internal fund management division within Temasek, but its customers now include several government agencies, pension plans, insurance companies, endowments and sovereign and private wealth funds.

Temasek owns large stakes in many of Singapore's biggest companies including DBS, Singapore Telecommunications and Singapore Airlines.

NTUC Income, which has over 2 million customers, is owned by Singapore's trade union movement. Several of its fund management personnel will move to Fullerton as part of the deal.

--Kevin Lim

Asia300

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