Tim McCarthy, chairman and chief executive, Nikko AM

Nikko AM to acquire DBS Asset Management

Nikko Asset Management has reached an agreement with DBS Bank to acquire DBS Asset Management.

In return, DBS Bank will become a strategic minority shareholder in Nikko AM, taking a 7.25 per cent stake in the Tokyo-based firm.

This transaction will add USD7bn in assets under management to Nikko AM and broaden the firm's distribution capabilities in Asia.

As part of this arrangement, Nikko AM and DBS Bank will enter into a non-exclusive distribution agreement through which Nikko AM’s investment products can be distributed via DBS’s networks in core markets in the region.

Under the terms of the agreement, DBS Bank will inject into Nikko AM its Singapore asset management subsidiary; its 30 per cent stake in HwangDBS Investment Management Berhad, a Malaysian fund management firm; its 51 per cent stake in Asian Islamic Investment Management, an Islamic fund management firm in Malaysia (the other 49 per cent of which is owned by HwangDBS Investment Management); and its Hong Kong fund management subsidiary.

A total of 107 staff will move to Nikko AM as a result of this acquisition.

DBS Asset Management’s 33 per cent stake in Changsheng Fund Management, a joint venture fund management company in China, will not be part of the transaction and will be held by DBS Bank.

Nikko AM is already a 40 per cent shareholder of Rongtong Fund Management, the sixth largest Sino-foreign joint venture fund management company in China. 

The transaction follows just three weeks after Nikko AM signed an agreement to acquire Tyndall Investments, an investment management firm in Australia and New Zealand, and entered into a distribution alliance with Suncorp.

As a result of these two transactions, which are expected to close during the first quarter of 2011, Nikko AM will add approximately USD32bn of AUM to its books, bringing the firm’s total AUM to over USD150bn. 

Subsequent to this transaction as well as the recent acquisition of Tyndall, Nikko AM will have nearly 30 per cent of its assets sourced from outside Japan and close to 40 per cent of its employees based internationally.

Chairman and chief executive Tim McCarthy says: “We are extremely pleased to announce today the agreement reached with DBS to acquire its first-rate asset management division, DBS Asset Management. We welcome DBS as an important strategic shareholder in Nikko AM and look forward to partnering with DBS to further enhance the wealth management products offered to the bank’s many clients.”

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