UOB Asset Management Ltd (UOBAM) is building its presence in Indonesia’s fast-growing asset management industry following the completion of its acquisition of a 75 per cent stake in PT PG Asset Management (PGAM). Headquartered in Jakarta, Indonesia, with a branch in Surabaya, PGAM has expertise in mutual funds across equity, debt and money market securities, offering its products and services to both retail and institutional investors.
Through PGAM, UOBAM will offer to local investors its investment expertise across various asset classes, as well as in areas such as Islamic investments, smart beta1 and multi-asset strategies. UOBAM also aims to establish its new subsidiary as a centre of excellence that provides in-depth insights into the local market and specialised solutions in Indonesia-focused funds and investment mandates for investors across its network.
With its acquisition of PGAM, UOBAM has now grown its regional network to eight markets across Asia, namely Brunei, mainland China, Indonesia, Japan, Malaysia, Singapore, Taiwan and Thailand. In particular, UOBAM is strengthening its franchise in ASEAN through its expansion into Indonesia, the region’s largest market.
One-third of Indonesia’s population of close to 270 million comprises millennials2 who are the driving force of domestic consumption and economic growth. The country’s favourable demographics and positive economic outlook3 bode well for the local asset management industry. According to data from the Financial Services Authority of Indonesia, the country’s mutual fund industry rose 11 per cent year on year to IDR507.09 trillion (S$49.4 billion) in 2018. As at end July 2019, the industry was valued at IDR536.88 trillion (S$52.2 billion).
Mr Thio Boon Kiat, Group CEO of UOBAM, said, “We see immense potential in Indonesia’s asset management industry, driven by its economic development, increasing affluence and rising demand from individuals and institutions for investment solutions to protect and to grow their assets. Through our expansion into Indonesia, we will be able to offer our wide range of solutions and services to meet the needs of local investors. This acquisition in Indonesia also gives us the opportunity to participate in the growth of ASEAN’s largest economy, which will in turn drive our business growth.”
As part of knowledge transfer, UOBAM will also share with PGAM its experience and best practices from research, fund development and management to advisory and sales. These include the use of technology to increase efficiency in areas such as data optimisation and product distribution to serve better the investment needs of Indonesia’s digitally-savvy population.
Incorporated in 2011, PGAM is an asset management company in Indonesia and holds an investment management licence issued by Otoritas Jasa Keuangan, the financial services authority in Indonesia. PT Multikem Suplindo, the other shareholder of PGAM, is a wholly-owned subsidiary of Celebes Capital.
1 ‘Smart beta’ investing refers to the portfolio construction methodology of investing in solutions outside of conventional indices that capture inefficiencies through factors such as quality, value low volatility and size, in order to enhance risk-adjusted excess returns.
2 Source: “Indonesia: Unleashing The Power Of Consuming Class”, UOB Global Economics and Markets Research, 28 August 2019.
3 UOB expects Indonesia’s economy to grow at 6.5 per cent by 2030, compared with the current levels of around five per cent. Source: “Indonesia: Unleashing The Power Of Consuming Class”, UOB Global Economics and Markets Research, 28 August 2019.
