HSBC Group’s announcement last week that its investment business would buy Atlantic Advisors LLC, a New York investment management company, was a step forward in the reorganization and strengthening of its global institutional asset management business, an executive said.
Atlantic Advisors, a privately held fixed-income specialist, is to be integrated into the banking company’s newly created HSBC Halbis Partners, a specialty unit with $65 billion of assets under management that will stand free from the rest of HSBC Investments USA Inc. With offices in New York, London, Paris, and Hong Kong, it is to focus on institutional account management.
An analyst said creation of the Halbis unit looks like HSBC’s effort to make its institutional asset management business commensurate with the parent in size and reach.
Burton Greenwald, the president of BJ Greenwald Associates in Philadelphia, said that HSBC’s asset management reorganization is an attempt to catch up to other big players. With its size and international prominence, HSBC should be managing a lot more money, he said.
“I think fundamentally what they’re doing now comes from a desire to start to become a major player internationally and in America, which they had not achieved previously and which was really somewhat disappointing given the size of their organization,” he said.
According to Pensions & Investments, an industry magazine, HSBC Asset Management ranked 45th last year in worldwide institutional assets under management, at $84.6 billion. Peer banking companies’ units like State Street Global, at $1 trillion; Barclays Global, $958 million; Mellon Financial, $468 million; and Deutsche Asset Management, $467 million, meanwhile, were ranked in the top five.
The Halbis unit will be completely focused on performance rather than distribution, said Gregg Diliberto, the head of HSBC’s fixed-income business. (Though Mr. Diliberto’s specialty is the fixed income business, Halbis will also manage some equity and alternative investments.)
“For big institutional products, we want to be on our own feet,” he said. “From the bank point of view, they only want to recommend a specific unit if it’s as good as the next guy.”
HSBC is placing its institutional asset managers in the group along with the Atlantic team. In all, Halbis will have 200 investment professionals around the world. The core of the investment business, meanwhile, will stay together within HSBC Investments. It will handle product development, sales, marketing, and multimanager funds that include portfolios managed by other fund companies. It will manage about $140 billion of assets. HSBC has more than 1,600 investment employees, and they are to be divided between the two units.
HSBC Halbis aims to compete with the best “active” institutional managers in the industry and to do it with independence from the bank, Mr. Diliberto said. Active management excludes index funds, which essentially run themselves in terms of portfolio content.
The Atlantic deal is to close during this quarter, and the company’s employees will join HSBC Halbis shortly thereafter, Mr. Diliberto said. Atlantic has $700 million of assets under management; it specializes in managing global emerging-markets, fixed-income products for big corporations and institutional and individual investors. It has experience investing in Asia, Africa, Eastern Europe, Latin America, the Caribbean, and the Middle East.
“Atlantic is a great matchup, a tremendous investment engine with great performance,” Mr. Diliberto said. The deal will let its managers “focus on running money and not so much on running their business,” he added. The acquired firm will also be able to take advantage of HSBC’s distribution and local research worldwide, he said.
