Putnam Investments is looking for European banks, insurers, and asset managers as partners for its effort to expand distribution overseas.
The Boston asset management unit of Marsh & McLennan Cos. Inc. announced Monday that it had formed a partnership with Spain’s Abante Alternative Investments. Adrian Misarti, a managing director at Putnam who helped develop the partnership, said it would let his company enter the Spanish institutional market and further tap into Europe’s growing asset management business.
Mr. Misarti said Putnam wants more local partnerships in Europe. It has offices in London and Tokyo, he said, and also has distribution partnerships in Japan, Germany, Canada, and Australia.
“With a partner, a firm like ours has the advantage of working with someone who has been in the country forever,” he said. “We want to form partnerships that know the market well. Putnam couldn’t be where it is in any of the markets where it has a developed a relationship without that local presence.”
Putnam has formed strategic alliances to market and distribute its funds and to manage pension assets worldwide. Its strategic partnerships represent more than $25 billion of assets with financial services companies worldwide.
The company began its overseas partnerships in Asia in 1997 through a deal with Nippon Life Insurance Group, one of the world’s largest life insurers, and its investment subsidiary, Nissay Asset Management.
The current distribution push comes in the context of Putnam’s lengthy string of fund outflows. It had $192 billion of assets under management at Jan. 31, according to Financial Research Corp. The company had $263 billion under management at Dec. 31, 2003, and has seen a 27% decline since then. It has had 36 consecutive months of outflows — $76.9 billion in all — since January 2003 as market conditions and then a trading scandal weakened it.
Mr. Misarti said the partnership in Spain is unique because it is with a much smaller company than earlier partnerships in Australia, Germany, and Italy.
Abante Alternative is a subsidiary of the Spanish financial services company Abante Asesores. The unit, which manages $672.2 million, offers asset management services to institutional investors in Spain such as pension funds. Abante Asesores is an independent financial company started in 2001 by former managers at Morgan Stanley.
“They are a relatively new and relatively small asset manager,” Mr. Misarti said. “But they are a high-quality, fast-growing asset manager that presents us with a lot of opportunities in Spain.”
Janus Capital Group Inc. is another large U.S. fund company using partnerships to expand distribution overseas. The Denver mutual fund company signed an agreement in 2003 with 30 Taiwanese banks and has offered 10 Janus funds through them. It began selling its funds in Taiwan in 2002 through an exclusive arrangement with Citigroup Inc. and since has accumulated $500 million of assets but has increased assets more through the local bank partnerships.
Beginning in 1998 Janus started local distribution partnerships in the United Kingdom, Netherlands, Sweden, Norway, Switzerland, Germany, Italy, and France.
Neal Jenkins, the director of marketing and communications for Janus’ international business, said from London that it has $10 billion of assets under management outside the United States. He said, though this is relatively small compared to Janus’ total assets under management ($148.5 billion at Dec. 31), that the company sees a lot of potential abroad.
“We have been in Europe for seven years, and we are making good traction in these markets,” he said. The international partnerships are “one of our fastest-growing areas.”
Fidelity Investments has handled its international growth differently. Its sister company, Fidelity International, is based in London and manages all assets in markets outside North America.
Richard Miles, the director of corporate communications at Fidelity International, said it does more than just distribute Fidelity products in other countries. It also manufactures and distributes equity and bond products, he said.
The unit has $250 billion under management, distributes products in 23 countries, and is an authorized asset manager in the United Kingdom, Japan, Germany, Korea, and India.
Mr. Miles said Fidelity International’s model for European expansion is to open a distribution and sales site and begin offering selected funds with multiple share classes. “At a particular point, when we have established ourselves,” he said, “we will decide whether to open our own investment management business, and we’ll acquire the local authorization to manage assets locally.”
The unit will look to expand over time, he said, but given its expansion last year into Germany, Korea, and India, it may not enter another market for some time.
Mr. Misarti said Putnam is looking in other regions but has not established a timetable for more announcements. “We are always looking for alliances in a lot of different countries,” he said. “There are a lot of opportunities. There are a lot of opportunities in Europe, and Spain is indicated as one of the fastest-growing markets in Europe.”
There is room in Europe for many distribution competitors, he said.
“I believe our approach is the correct one, and there are a lot of firms following us,” he said. “There are a lot of advantages to partnerships in order to expand distribution. Europe is a market where good deals take time. You could have a lot quickly, or it could take more time. A lot of it depends on which markets you are trying to enter.”
