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MUFG to spend up to US$9b on acquisitions to double assets under management
[TOKYO] Japan's Mitsubishi UFJ Financial Group (MUFG) is ready to spend up to one trillion yen (S$12.27 billion) to acquire global asset management firms to double the amount of clients' money that it handles, a top executive told Reuters.
Mitsubishi UFJ Trust and Banking Corp, the asset management unit of Japan's biggest banking group, is primarily targeting US and European asset managers as it aims for assets under management of over 100 trillion yen, the executive said.
"We aim to become an asset management company with a global presence," Mikio Ikegaya, Mitsubishi UFJ Trust and Banking's chief executive officer, said in an interview, without providing a time frame.
MUFG and domestic peers are shifting focus to asset management as the traditional lending business suffers diminishing returns due to the central bank's low interest rate policies and strict capital regulation.
The banks see asset management as fertile ground in Japan, where over half of households' US$16 trillion worth of financial assets are in cash and bank deposits, indicating ample room for growth.
Mr Ikegaya said potential acquisition targets are asset managers in the United States and Europe, given their scale.
Among them, those with "an edge in global active management" are of particular interest, he said.
In active management, fund managers pick stocks in which to invest, as opposed to passive management which involves tracking market indices.
He said his company may also buy asset managers in Asia, though the scale of deals would be a lot smaller.
After achieving its goal of doubling assets under management to about US$900 billion, MUFG would still be far behind global leaders BlackRock and Vanguard Group, which manage about US$5.7 trillion and US$4 trillion respectively.
Mr Ikegaya, who assumed his role in April last year, said his company has no intention to compete head-on in low-cost index-tracking products, where BlackRock and Vanguard dominate.
So far, MUFG and other Japanese banks' investment in overseas asset managers has been mostly limited to minority interests.
Officials point out challenges of outright acquisitions such as risks of defections by talented fund managers after ownership change.
"We started with a minority investment in Aberdeen about 10 years ago and we have gained the experience and know-how necessary for majority investment," Mr Ikegaya said, referring to Aberdeen Asset Management.