Founded in 2010, Thirdrock has client assets under management (AUM) of about SGD3 billion, as of December 31, 2018. The deal, the price of which was not disclosed, is expected to be completed during the second quarter of this year.
A major leap forward
Lints says the deal is transformational for the firm in Asia. “It is a win-win when we look at the AUM, the people, the clients and the offering. It more or less quadruples our size in terms of AUM. It really is an ideal strategic fit and represents a substantial and exciting transition for us here in Asia.”
He explains that Thirdrock is principally focused on advisory business and adds a lot of advisory capability to the overall offering, as well as bringing with it a significant number of very good RMs and investment professionals. Thirdrock’s wealth management arm will be merged with Schroders’ existing Singapore business and will then operate and trade as Schroders Wealth Management.
He adds that Schroders is only buying the wealth management business of Thirdrock, whereas the other businesses will be closed down as part of the deal.
Jason Lai, CEO and founder of Thirdrock Group, will take on the leadership of Schroders Wealth Management in Asia as head of wealth management for Asia, and spearhead the drive to grow the business across the region. Melvyn Yeo, co-founder of Thirdrock Group and chair of its investment committee, will take on the role of deputy head of wealth management Asia.
They will then work closely with Lints, who will continue in his role as head of wealth management in Singapore, and also with Robert Ridland, Lints’ counterpart who heads wealth management in Hong Kong. Both will join Lai and Yeo to form a new four-strong management team to drive the overall business forward across the region.
As part of the integration, Lints’ role has also expanded more than doubling the size of his team. Moreover, there will no longer be such a divide between Singapore and Hong Kong.
“The deal further highlights Schroders’ ambition to build a leading wealth management business in the region,” Lints reports. “The idea is to bring the two offices in Singapore and Hong Kong much closer together to represent the whole of Asia. It is inspiring, as we will have the new management team covering the whole of Asia and together we look forward to rapidly developing Asia, which is a key priority for the Schroders Group.”
Peter Hall, global head of wealth management at Schroders had said at the time of the Thirdrock deal’s announcement: “We have the opportunity to create a unique business model in Asia, combining the institutional investment expertise, leading brand and extensive network of Schroders with the entrepreneurialism, open architecture and personal service of an independent asset manager.”
Thirdrock’s Lai had also commented that to join what he described as a well-resourced global investment and wealth management business would provide Thirdrock with access to greater investment expertise and thereby enhance its proposition for clients.
The deal also neatly complements the partnership Schroders announced in November last year to partner with Maybank Asset Management Group (MAMG). That collaboration is designed to draw on the strengths of both the regional footprint of MAMG, and the global investment expertise of Schroders.
Marking the start of that collaboration, two discretionary strategies were launched in November 2018 – the Global High Dividend Equity Portfolio and Global High Conviction Portfolio - both managed by Maybank Asset Management Malaysia and offered to sophisticated investors, with Schroders Singapore as the investment adviser.
Badrul Hisyam, Chief Executive Officer of MAMG had said at the time of the deal that the tie-up was in recognition of what he described as “the growing demand for sophisticated, outcome-oriented global investment solutions, particularly among the High Net Worth (HNW) community”, and he commented that it would expand the range of global investment strategies to cater to their evolving financial needs.
As part of the partnership, MAMG and Schroders will undertake further collaboration projects in 2019 to co-develop solutions across other asset classes, including Shariah-compliant investments and private assets.
“Maybank is a fantastically well-run business and it has a very clear strategy, with a great client base,” Lints comments. “And their growing client numbers have a strong need for investment product, particularly well-managed global product. There is very much an underlying demand that we are directly servicing through this strategic partnership.”
He adds that based on the experience thus far with Maybank, Schroders Wealth Management is already in discussions in other geographies with other key players to roll out similar arrangements.
A true path
Lints looks back further in time to put the recent expansion initiatives and future plans in sharper focus. He recalls that when he joined the Schroders Group in 2016, the wealth management operation represented around 10% of the overall revenue globally but was already on a clear strategic development path in the UK and Europe through transformational acquisitions such as that of the rival fund management firm Cazenove Capital for GBP424 million in 2013. And more recently, another major, pivotal deal arrived in October 2018 in the form of the strategic wealth management partnership with the UK’s Lloyds Banking Group.
Lints comments that amidst these major changes, the firm had for some years recognised that the Asia business was too small relative to the dramatic expansion of private wealth in the region and the opportunities this offered, as well as relative to its fast-evolving UK and European operations.
He clarifies further by explaining that for continental Europe the wealth management business operates as Schroders and in the UK and in the Channel Islands it trades as Cazenove, both for historical reasons of market and brand perception.
Horses for courses
“But here in Asia,” he reports, “I had decided that the Schroders name, which has been well-established in Asia for more than 50 years, was preferable to the Cazenove brand here, which is not well-known, so we have traded here as Schroders Wealth Management since September 2017.”
Lints notes that when he joined in 2016, his mandate was to help spearhead the thrust in the region forward. “I knew I had to move it forward significantly in terms of size, form, and profitability and that was always going to be achieved principally through acquisition. If you recall, I had spoken quite openly at Hubbis conferences in recent years about looking for suitable targets. We kissed a lot of frogs in our quest, but Thirdrock really stood head and shoulders above everyone else.”
A perfect springboard
He adds that culturally, Thirdrock fits ideally. “The strategic direction in which they are moving their business is highly aligned with what we are aiming to achieve in this region,” he reports. “The team is fantastic and the fit from the investment and relationship manager perspectives is perfect for us.”
Thirdrock is also an ideal platform for further acquisitions. “We expect this will be the first of many and I am already out there speaking to various other people in the marketplace. The clear ambition is to grow, and acquisitions, or strategic partnerships such as with Maybank, are the routes we will pursue. We are on a bit of a roll at the moment, in these various directions.”
Lints is therefore very confident that the Schroders name will grow to a considerably higher profile in Asia. “We are making many positive waves,” he says. “This acquisition is somewhat unique, in that we are acquiring a complementary type business that will take us to a position as the first true wealth manager for pan Asia. We have high aspirations.”
Lints closes out the interview with a reiteration of the firm-wide drive towards expansion in the region. “I came in here in 2016 to grow the business,” he concludes. “I said from the outset, part of that would be through acquisition. I believe that my word is my bond, so I have followed through on that. We have attracted very good people, and we are rapidly moving in the right direction.”