Having survived the fallout from one of Japan’s most notable financial conquests, Takumi Shibata has returned to the heights of power. Now president and CEO of Nikko Asset Management Co., the nation’s third-largest fund manager, he’s keen to take on the world again.
As COO of Nomura Holdings, Shibata made global headlines in 2008 when he helped execute the firm’s $2 billion acquisition of Lehman Brothers Holdings’ investment banking and equities operations in Asia and Europe, the Middle East and Africa. He resigned in 2012, shortly before Nomura announced $1.2 billion in losses, much of them due to the Lehman acquisition, and amid an insider trading scandal that also prompted the departure of CEO Kenichi Watanabe. But Shibata resurfaced a year later as chairman of Nikko AM before taking his current posts in January.
“We are defining ourselves as Asia’s premier global asset management company,” he says at Nikko AM’s headquarters on the 42nd floor of the Midtown Tower in Tokyo’s fashionable Roppongi district. Shibata, 61, who succeeded veteran British asset manager Charles Beazley as president and CEO, relinquished his chairmanship in April to David Semaya, a former Barclays executive whom he hired. In March, Shibata recruited Al Clark, an Australian who previously led multiasset strategy at Schroder Investment Management’s Asia division, to the new post of global head of multiassets. By expanding Nikko AM’s fund offerings beyond its traditional equity and fixed-income purview, Shibata hopes to attract global institutional investors, who are demanding a wider range of strategies, he says.
Nikko AM is strong in the domestic retail market, with about 60 percent of its $161 billion in assets coming from Japanese household savers. The rest of its client base is mostly corporate and institutional investors based in Japan and elsewhere in Asia. “We are underrepresented in terms of global institutional clients,” Shibata admits. “That is a treasure mine we haven’t mined sufficiently. I do believe we have not been accurately representing our capabilities.”
Nikko AM is benefiting from Abenomics, Prime Minister Shinzo Abe’s combination of fiscal stimulus, monetary easing and structural reforms, which has helped the Nikkei 225 index climb more than 40 percent since January 2013. The firm’s three top-performing funds — the ¥20 billion ($196 million) Japanese Emerging Equity Open, the ¥32 billion Nikko Japan Small-mid Cap Growth Fund and the ¥3 billion Nikko Capital Open — gained 158 percent, 116 percent and 98 percent, respectively, last year.
Then there are Nikko AM’s offerings from its non-Japan fund managers, many of whom joined the outfit through its half-dozen acquisitions over the past few years. In 2011, for example, it acquired Tyndall Investment Management, a Sydney-based firm whose A$23 billion ($21.5 billion) in assets are invested mostly in equity and bond markets in Australia and New Zealand. Last October, Nikko AM bought $300 million Treasury Asia Asset Management, gaining an eight-member Singapore-based investment team with experience managing funds for Asian and global institutional clients.
To win business in the U.S. and Europe, Nikko AM plans to build the sales forces at its New York and London offices and possibly acquire investment firms or their teams, Shibata says. In London it will target sovereign wealth funds, pension funds, insurance companies and central banks, he explains; in the U.S., family offices, endowments, pensions and insurers. “We have teams in both offices, but it isn’t enough.”
Nikko AM’s main draw for foreign institutions will be multi-asset funds that go beyond stocks and bonds by allocating to assets such as currencies and real estate investment trusts. In the near future the firm will add exchange-traded funds and various derivative instruments, and possibly even some vehicles that use hedge fund techniques. “We will be using primarily an objective-based investing method or an absolute-return strategy,” says multiasset head Clark.
Single-asset-class themes have their place, but the returns often aren’t high enough for a growing global retirement community, notes Yu-Ming Wang, Nikko AM’s global head of investment and CIO of international investing.
Despite growing pessimism among investors about emerging markets and Asia, Shibata remains optimistic: “We are seeing Japan’s departure from 20 years of deflation,” he says. Although China is slowing down, its government is introducing market reforms, he adds; meanwhile, strong corporate players such as Japanese fashion retailer Uniqlo Co. are emerging throughout Asia while weaker ones die or consolidate.
Nikko AM is well positioned to grow, Shibata contends, especially with a resurgent Japan. “Yes, the public sector debt is 230 percent of gross domestic product, but let’s not forget Japanese households have savings that are 300 percent of GDP,” he says. “So from that perspective, Japan Inc. is still strong.” • •
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