Avenue Asset Management expects that its assets under management (AUM) will grow to US$1 billion over the next 12 months – “a conservative estimate” based on its AUM per relationship manager (RM) forecasts, says executive director and founding partner Eric Pong, who adds that Avenue plans to go public in three years’ time.
The two-year-old independent asset manager (IAM) has 10 RMs, while a further three will join by September. Pong says hiring will now take a back-seat since Avenue’s frontline – consisting of former HSBC, UBS, Julius Baer and Credit Suisse private bankers – needs time to adapt to the IAM model.
Since established RMs tend to manage US$200-400 million each, Pong expects Avenue’s new RMs will have accumulated around US$100 million in client assets on average within the next 12 months.
The average AUM per RM for the region’s top 20 private banks by RM headcount increased to US$298.3 million in 2016, from US$282.4 million a year before, according to data obtained from Asian Private Banker’s 2016 AUM and RM Headcount Tables. Goldman Sachs Private Wealth Management topped the table with US$769.2 million of AUM per RM.
Meanwhile, Pong says that Avenue is planning an IPO “after three years”.
Richard Hu, who joined Avenue from HSBC Private Bank last year as the IAM’s MD and founding partner, told Asian Private Banker in November that an IPO “will enable us to further build our brand, gain leverage when negotiating with product providers and set up our own private equity and fixed income fund, including cooperating with Chinese financial institutions on various aspects”.
Hu noted at the time that no IAM in Asia has publicly listed.
Chinese clients lead demand for IAM services
Chinese families account for around half of Avenue’s business, says Pong, who expects this proportion to shift upwards given strong appetite for offshore assets among Chinese HNWIs. Further, the Chinese market remains relatively untapped, while Chinese families are more willing than others in Asia to pay the annual management fees charged by IAMs.
“It’s more difficult for a business model like ours to serve local [Hong Kong] and Taiwan clients, because they are quite fee-sensitive. According to my personal experience, roughly half of Chinese clients are willing to pay the management fee,” Pong says.
He adds that Avenue plans to launch two mutual funds this month and another by September.
The firm has restructured its business after the SFC granted it licences for the operation of a family office. All discretionary account management activities now fall under its family office unit, while Avenue’s asset manager arm will oversee the mutual funds business.
Avenue decided to launch its own in-house mutual funds in order to “build our brand name and provide a track record for potential clients”, Pong says.