Organic growth, long-term approach to help fuel Pictet’s Asia expansion

Press interview

Renaud de Planta has been Senior Managing Partner of the Pictet Group since 1 September 2019 and a Managing Partner of the Pictet Group since joining Pictet in 1998.

Interview by Genevieve Cua, published in Business Times Singapore, on Tuesday 28 December 2021.

Pictet’s wealth management business has identified Asia’s economic growth as one of seven key themes over the next few years

Pictet Wealth Management’s assets under management (AUM) in Asia have grown by around 40 per cent over the past two years, or a compounded annual growth rate of 17 per cent. In the first half of 2021, net new money more than doubled on a year-on-year basis, and grew almost six times since the first half of 2019.

Renaud de Planta, Senior Partner of the Pictet Group, who was in Singapore recently, says: “Our aim is always to deliver superior investment results for our clients. That’s at the heart of what we do and we optimise everything in that direction. AUM growth is a logical consequence, but never a goal per se.”

The Pictet Group manages around 690 billion Swiss francs ($1 trillion) in assets as at June 2021, comprising wealth management and asset management. It was founded in 1805 on a partnership model which has evolved through the years. It does not offer commercial loans or investment banking.

In terms of people, the Group employs roughly 5,000 globally. Around 10 per cent are in the Asia-Pacific in the wealth and asset management operations.

“We grow organically. This way we preserve our unique corporate culture and also a spirit of investment leadership because at Pictet we only invest money for our clients. That has been our only business for 217 years. Because our interests are strongly aligned, we are not pushing products, nor are we in the brokerage business… I think that sets us apart from many other players.

“If we continue at our current pace, Asia will become a key and even bigger and more essential part of our franchise. Given the feedback I’ve received from clients here, and the need for what we offer - high-performing portfolios ... with a long-term view and strong exposure to private asset opportunities - I think we're extremely well placed to grow.”

Pictet has identified Asia’s economic growth as one of seven key themes over the next few years. The Group expects Asia’s economic heft to increasingly determine the shape and direction of global trade flows, capital and innovation.

De Planta says: “Asia has been outgrowing the world for many decades. But we do believe that the financial side of the Asian economy is only at the beginning - both in terms of the pool of savings available in Asia and also in terms of investment opportunities.”

In terms of population, the Asia-Pacific accounts for 60 per cent of the world, and about a quarter of global GDP. “But it’s only about 6 to 10 per cent of global equity investment, depending on the index you look at, and only 3 per cent of fixed income investments. So there is a massive catch-up opportunity.”

Pictet claims to be the first globally to launch a China domestic debt fund in 2015 under a UCITS or European fund passport structure. As at end-November, the fund comprised US$1.7 billion in assets with 88 per cent invested in domestic China debt.

He expects Asia’s share of global wealth to rise to 30 to 40 per cent by 2030. “That amounts to a gigantic shift of relative power because the Asia-Pacific will be the number one source of savings in the world... Since we want to be a global provider of investment services to private and institutional clients, we have to be present here.”

He is sanguine about China’s investment outlook, despite regulatory shifts this year and the debt squeeze sparked by defaults among developers such as Evergrande. “On hindsight we should have seen the regulatory changes coming. Part of our role is not to over-react to short-term events. As investors we take a long-term view and try to look beyond the next hill. The mega-trends behind China’s growth, in terms of the work and savings ethic and entrepreneurial spirit are not changing. I think it would be a bit foolish to throw in the towel.

“At this juncture there are lots of very positive fundamentals... I think Chinese markets are not expensive. You could make a case that the PBOC has been the most disciplined and orthodox of all major central banks in the past five or 10 years, which also explains why the currency has been strong. You can also make the case that there is room for easing. It’s one of the few major economies where the central bank has room to ease which could help the market.”

The Group has also identified private market investing as one of the key global trends. Pictet focuses on private equity and real estate. De Planta says the Group was an early investor in some of the world's largest PE firms, which “gives us great access to capacity”, both in terms of funds and co-investment opportunities.

Such opportunities apply to real estate as well. “We see a lot of interest in Asia (in co-investment opportunities). Our clients sometimes have made a fortune in real estate and know everything about Asian real estate, but they don’t know so much about European real estate. They are really happy to team up with us to exploit opportunities in Europe.”