Lazard boosts Asian region business as silos tumble

Lazard Asset Management has become increasingly global, lifting the proportion of non-US assets under management to close to 50 per cent in the past year, and widening the base of its non-US investment strategies.

The value-orientated stock-picking firm embarked on a restructure after Ashish Bhutani, former head of new products and strategy, became chief executive in March 2004. Lazard has abolished the old regional ‘silo’ system of management in favour of an integrated approach to business development and global investment. Rob Prugue, who joined the Sydney office as chief executive in November 2002, is in charge of the region, including the fast-growing Japanese and Korean offices. On a visit to Sydney last week, Bhutani said that, by adopting a three-pronged strategy to the business, Lazard had “de-siloed” itself. “We now have lots of interaction at multiple levels,” he said. “We’ve also become broader than a single-style shop.” Lazard’s hallmark strategy is still relative value, which is a philosophy that underpins all its products. However, it also has a successful thematic global product and last year launched the Australian-designed global listed infrastructure fund. Of Lazard’s $US97.7 billion under management last December, 43 per cent is sourced outside the US, which compares with 47 per cent a year earlier. Australian-sourced assets (about $US10 billion) rose from 9 per cent to 11 per cent of the company’s total in the past year. Furthermore, the flagship international equities fund (EAFE or non-US) jumped from $US16.1 billion to $US22.5 billion and the global equity fund jumped from sixth place on the company’s internal FUM ranking to second place, from $US7.6 billion to $11.3 billion. Bhutani said: “We haven’t got our fair share in Japan. We’ve been there since 1990. But in the past 18 months we’ve started the Japanese long/short fund, with about $US600 million, and a strategic equity (best ideas) fund with about $US600 million.” Lazard also launched a Korean Corporate Governance fund last year, which has about $US300 million. Corporate governance of listed companies had become a hot topic in Korea, Bhutani said. “The equity culture in Korea is just starting to take hold.” The ‘three-pronged’ strategy for Lazard in each of the markets in which it operates is to have manufacturing (investment management), export and import capabilities. Bhutani said that having a local manufacturing base – with Lazard’s Australian equities capability being launched in 1999 – build a better franchise and diversifies the risk compared with just having a marketing office. The main reason for his most recent Australian visit was to attend a management off-site meeting to discuss how the Australian business could be developed within an Asian context. “If you look out over the next 25-30 years, Asia is going to be the future. It’s important for us to have an India strategy and a China strategy,” he said. “We also need to see how we grow the Japanese business beyond a fairly narrowly defined marketing effort. We have $US21 billion in the UK and only $US3 billion in Japan; at one time they were about equal.”