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UK wealth buy first step in Asian giant’s $10bn plans

UK wealth buy first step in Asian giant’s $10bn plans

The dramatic return of Charles Aram to Henderson Rowe to sign a deal with Asian funds giant Rayliant Global Advisors was only the start of more ambitious plans for the company, which is looking to run $10 billion (£7.6 billion) in three years.

Jason Hsu, Rayliant chairman and director at Henderson Rowe, said: ‘On the private client side, we are seeking aggressive growth over the next three years. Our target is to get our wealth business to $10 billion globally.

‘We now have our first foothold in the UK and Europe with Henderson Rowe. We will very soon be doing the same thing in the US and rolling that out in Asia, and continuing to grow in each location organically and inorganically.’

Back in July, Wealth Manager revealed that Rayliant, which has $24.1 billion (£18.3 billion) of assets under management (AUM), had bought Henderson Rowe, which currently has £650 million of AUM, for an undisclosed sum.

The acquisition marked Rayliant’s first venture into wealth management after years of institutional focus.

Aram (pictured) said: ‘I don’t think his [Hsu’s] ambition is to stop just at Henderson Rowe. If the model that is developed at Henderson Rowe delivers in any way close to what we think it can deliver, then it offers us a fantastic platform to marry up with other companies.’

Rayliant’s origins

Rayliant, based in Hong Kong and Taiwan, was previously operated as the Asian arm of Research Affiliates, which was co-founded by Hsu and Rob Arnott. Hsu became the majority owner of Rayliant in 2016 and rebranded the firm to what it is today.

‘From an investment philosophy perspective, we are quantitative. From a business model, historically we have always been institutional. We service clients that really demand both very high quality products and have much longer investment horizons,’ Hsu explained.

‘You can have sophisticated conversations with these clients, because our strategy by nature is more sophisticated. But for us, there is no reason why these cannot be made available to the private client business.’

He added that the firm realised that ‘it needed to get married to someone who has been doing this a long time’, because of the cost of educating private clients and to establish trust with an ‘institutional brand that is relatively well known’.

Integration

Since the acquisition, the team has been busy integrating things on the research side. Across the whole firm, there are 73 people, 23 of which are from Henderson Rowe. On the research team, Henderson Rowe’s three research analysts have started collaborating with Rayliant’s 16-strong team.

Aram said: ‘We are now integrating the research between our own fundamental analysts and the Rayliant research team, such that we are improving our fundamental stock selection methodology. And we’re also going to be taking advantage of the work Hsu’s done on multi-factor investing.’

He added that following the integration, the priority is to launch a number of funds based on Jason’s multi-factor strategies for developed markets, emerging markets, China and Asia.

Aram is adamant that the acquisition of Henderson Rowe is different to other deals that have taken place in the UK wealth management space.

‘When we had a discussion about it initially, Jason made it very clear this is not just a roll up. If you think about many of the deals in the private wealth space, they are aggregation-type deals – cost savings generated by the dismissal of staff in the middle and back office. And then there is some tussle over culture, and some eventual winner arrives,’ he said.

‘This is fundamentally different, in that Rayliant had no private client business. The acquisition of Henderson Rowe gives it access to retail clients. Therefore, there has been very little in the way of any reduction of costs through merging back offices and middle offices. That did not take place. What has happened is our research teams have been talking and working on ideas.’

Aram also pointed out that although he would like to have integrated systems, it is not the main priority at the moment.

‘It naturally makes sense to try and have compatible systems across the world. But if you’ve ever tried that you’ll know that there are some quite big challenges associated with that,’ he said.

‘Personally, I am very keen to do this, and I think there is willingness from Rayliant to integrate systems as much as possible. But it’s a work in progress. We certainly do want to take advantage of some tech developments in terms of customer experience.’ 

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