First Sentier Investors takes its new name into new markets

Having recently rebranded as First Sentier Investors, the Australian asset management group, overseeing $150bn, plans to expand its footprint outside its home market. This was the key reason for the early September trip from Sydney to London, undertaken by the firm’s CEO, Mark Steinberg.

Busying himself explaining the vision of new owners, Mitsubishi, to both clients and staff of the funds franchise, he quickly realised this was not always an easy story to sell. Around 400 of his 1,000 staff are UK-based, split between London and Edinburgh, all hungry for information from the group’s Sydney HQ and Asian heartlands, where many products are both sourced and consumed.

As Japanese financial services giant Mitsubishi UFJ Trust and Banking Corporation acquired the business from Australia’s Commonwealth Bank in August 2019, several months before Covid-led upheavals, lockdowns and travel restrictions, this represents Mr Steinberg’s first opportunity to explain his vision and thinking behind it to many of his European stakeholders.

My ever-changing brands
 
Not only has his investment group been renamed First Sentier – previously called First State Global Asset Management in its home market and First State Investments beyond Australia – but there are also associated, historical brands to maintain and revive. These include Edinburgh-based Stewart Investors, a favourite Scottish boutique known as Stewart Ivory in a previous incarnation; Asia-Pacific and emerging market equity specialists FSSA Investment Managers; direct infrastructure managers Igneo Infrastructure Partners; and systematic equities unit Realindex.

His telling of the long and winding history of perpetual rebranding, awkward acronyms and changing cultures over three decades is almost apologetic, yet Mr Steinberg is clearly comfortable with the First Sentier brand, which touts the core specialities of global property and global listed infrastructure to its international audience.

“Our culture has changed for the better,” says the South African-born funds boss, still running along rivers, over hills and across parks each morning in his late 50s. While under previous ownership, he felt restricted managing the business unit of a domestic Australian bank; today he spearheads the Japanese firm’s foreign expansion drive.

“They are looking to continue to invest outside their home market of Japan and get more exposure to non-traditional products, less banking and more non-banking. Their acquisition of us has affected both those strategic ambitions.”

Turning Japanese

During an earlier stint in Tokyo, Mr Steinberg learned enough Japanese to make himself understood in business circles. “But more importantly, I remembered a little of the culture, which was helpful in initially establishing a relationship with the Mitsubishi representatives responsible for our transaction,” he says. “That relationship has grown and strengthened. They take a long-term outlook, extremely supportive of our First Sentier standalone business.”

The next step, Tokyo assures him, is investment for acquisitions, potentially in Europe, where he seeks to broaden the product range which sales staff take on the road. These will likely focus on the private markets segment currently so popular among wealth managers, whose customers complain of market volatility and lack of viable uncorrelated alternatives.

“I think exploring opportunities in private markets, in the unlisted space, does make sense for us,” he adds. Any team recruited must take a long-term view associated with active management, respecting responsible investment principles embedded in their day-to-day process and thinking.

Conversations with clients about the First Sentier brand and philosophy have been broadly positive, confirms Mr Steinberg. “What we were able to do early on in the story, was give [clients and consultants] the confidence Mitsubishi had acquired us and why they would be a good owner for our business,” he says. “Now we are able to go to the market and give them a credible story of how we will be run post acquisition.”

Eye on the ball

But as the boss of a mid-sized firm, battling in a field dominated by giants, he is conscious of the brand-related challenges he faces. A lover of English football, he expresses sympathy for smaller clubs under foreign ownership, struggling to find an identity or sense of purpose. He mentions the example of Bournemouth, whom he watched being trounced 9-0 by Liverpool during his visit, leading to the sacking of head coach, Scott Parker.

“We have to be quite proactive with investors, soliciting their views and explaining the performance of our strategies in [tough] conditions,” says Mr Steinberg.  Clients must be able to feel “comfortable and confident that we are doing what we say we are doing”.

While the jury is still out on the effectiveness of First Sentier’s future plans, industry voices warn against excessive and unnecessary rebranding, negatively impacting wealth and asset management over the years.

“Changes of name can be confusing, particularly as many people invest in trusted and historic brands to give them peace of mind. This is particular to a lot of smaller Edinburgh investment boutiques who are sadly no longer with us,” says one seasoned Edinburgh insider who worked closely with Stuart Ivory and its successors.

“The appreciation of Scottish investors as assiduous accumulators of wealth has been tarnished significantly over the past decade or so, perhaps most exacerbated by the strange renaming, and subsequent underperformance of Standard Life Investments to Abrdn. It should never be underestimated how much investors cherish a history and solid brand in troubled times.”

The role of top management, such as Mr Steinberg, must be central to any brand initiative, as it is “one of their most powerful assets to leverage,” believes Anant Deboor, head of strategy at strategy/communications agency Wunderman Thompson in Hong Kong.

“Fund managers really need to define and manage their brand to create ecosystems of trust, across markets, products and audiences coherently,” says Mr Deboor. “The CEO is the top brand manager to ensure that.”