Industry Updates

Edmond de Rothschild AM wants to raise $1bn from Asia for new emerging markets CB fund

Friday, February 12, 2010

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Opalesque Industry Update – Paris-based Edmond de Rothschild Asset Management (EdR AM) launched a new emerging-markets convertible-bond fund that will source most of its investments from Asia. Bruno Vanier, EdR AM’s CIO said the firm would try to raise at least $1bn AuM within a few years. The fund was incorporated on Dec. 31, 2009.

According to a report by AsianInvestor.net, the Paris-based asset manager will target European and U.S. investors in the short term, but would eventually target Asian investors. Vanier said there is no target date for a regional fundraising yet, but added he would like to ultimately source between 5% and 20% of assets from Asia.

He said the fund would allocate 70% of its assets to Asia. Hong Kong and China will be the major focus, with a 25% allocation. The rest of the assets will be sourced from Singapore (12%), South Korea (12%), India (6%), Malaysia (6%) and a small percentage from Vietnam.

Reports that EdR AM would launch a convertible bond fund came as a Ucits (long-only) convertible bond fund, launched by Swiss firm Pictet and managed by Jabre Capital, attracted EUR805m after only nine days, according to a CitiWire.com report yesterday.

An EdR AM report announced in late November-09 it would expand in Asia by building on its China franchise. Vanier said the firm had sold small- and mid-cap equities products in China and in some parts of Asia last year.

In September-09, the firm said in another report that convertible bonds would go through a turning point. “Convertible bonds bore the full brunt of the financial crisis and the fall in equity markets but the end of 2008 was an excellent entry point for the convertibles market,” the report said. “We expect the excellent performance posted by convertible bonds since the beginning of the year to continue in coming months as they benefit from attractive yield to maturity and low volatility.”

Several factors reinforce the firm’s conviction that convertibles will deliver excellent risk-adjusted performance whatever the equity scenario adopted: attractive new issues, a discount on the existing universe and a more balanced investor profile.

The firm’s shift in focus to Asia also came with a major change in its organization with the appointment this month of its first non-family chief executive. Nigel Higgins will take over the post from David de Rothschild on March 1. David will retain his position as chairman.

Edmond de Rothschild Investment Managers is the asset management subsidiary of La Compagnie Financière Edmond de Rothschild, the French branch of the Swiss LCF Rothschild Group. EdR AM specialises in equity, convertible bond and diversified management for institutional clients, independent financial advisors, partners and private clients. – KM –

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