Socially responsible investing (SRI) has become an “important area of focus” for BNP Paribas Wealth Management in Asia, with the bank targeting India onshore clients in particular, Samir Bimal, the bank’s head of Indian markets, tells Asian Private Banker.
“Dynamic growth in Asian economies has been accompanied by diverse socio-economic environments and there is an urgent need to address social challenges that have risen due to these,” Bimal said, adding that the SRI market has been gathering momentum in Asia over the past few years, and this has prompted private banks and public institutions to target this space.
Bimal notes that within the broader impact investing space, the SRI universe is growing. Indeed, according to the Global Sustainable Investment Alliance (GSIA), by the end of 2016, about a quarter of global managed assets incorporated environmental, social and governance (ESG) criteria, with this market amounting to approximately US$23 billion after growing by 25% over the preceding two years. The GSIA says Asia is expected to exhibit strong growth, albeit from a low base.
To capitalise on this opportunity, Bimal says BNP Paribas Wealth Management is gearing up to expand its impact investment offerings in the region, with the bank having put in place induction and training courses for its clients and private bankers.
“Early this year, we introduced the SRI investment theme to roughly 1,400 of our clients across the Asia region,” he said. “Over 200 of our private bankers and offering team members within WM Asia have gone through orientation in the SRI offering in the first half of this year.”
India onshore in focus
Furthermore, Bimal is keen to explore ways to offer the bank’s growing roster of impact investing initiatives to clients in India. For example, the bank is introducing what Bimal calls a “structured opportunity” in partnership with select microfinance institutions (MFIs) in India, given the increasingly important role these firms play in impact investing.
“We are leveraging on the strength of our Corporate & Institutional Banking relationship in this space [SRI] and are in the process of offering a structured opportunity for wealth management clients to invest with identified MFI,” said Bimal. “This will allow our clients to look at returns with a social impact and the MFIs to raise funds to further accelerate their financial inclusion objectives.”
In addition to collaborating with its investment banking arm in India, the French private bank is also working with its asset management entity onshore to launch a “potential” opportunity on the alternative investment fund platform. This will involve investments in social enterprises engaged in the microfinance, education, water, sanitation, and healthcare sectors.
Bimal did not go into the specifics of the bank’s aforementioned partnerships with its investment bank and asset management entity in India.
Meanwhile, he said the bank is also organising a knowledge-sharing event with its “top private banking clients”, to be held at the beginning of the fourth quarter of 2017. According to Bimal, the event provides an opportunity for BNP Paribas Wealth Management experts to speak about various aspects of SRI.
Domestic players continue to dominate India’s wealth management sector, with foreign private banks still struggling to gain a meaningful foothold. Even so, BNP Paribas Wealth Management grew its India onshore business by 35.2% in 2016 to US$7.3 billion, ranking it sixth in the country, according to Asian Private Banker’s India AUM League Table. The French lender also topped the AUM per RM league table in India with US$429.4 million.
Impact investing on the rise
Experts have pointed to a lack of “commercially sound investment opportunities” and the shallow product mix available to private banking clients as reasons for this market’s relative nascency in Asia.
Still, more private banks are wading into the arena and exploring different avenues within the impact investing space.
Most recently, DBS gave its private banking clients access to a social sustainability bond, which provides loans to social enterprises and microfinance institutions. The US$8 million Women’s Livelihood Bond (WLB) was pioneered with Singapore-based Impact Investment Exchange and was listed on the exchange last week.
UBS Wealth Management – an early adopter in this field – has rolled out a string of impact investing funds in recent years. Around 40% of the US$325 million that UBS Wealth Management raised for a social impact private equity fund managed by TPG Growth came from private banking clients based in Asia, Juerg Zeltner, president of UBS Wealth Management, told Asian Private Banker recently.
Last year, the UBS Oncology Impact fund raised a chunky US$471 million in less than a year, with 60% of the capital flowing in from the bank’s Hong Kong and Singapore units.
Credit Suisse Private Banking, meanwhile, partnered with UOB Venture Management to raise US$55 million for an impact investing fund. The fund provides the Swiss lender’s UHNW clients with an opportunity to invest in small- and medium-sized enterprises whose businesses address key social challenges in the ASEAN region.