Cross-border joint ventures wane, says Cerulli
UK/US – The number of cross-border fund management joint ventures between US or UK fund managers and their counterparts worldwide dropped dramatically to 13 last year, compared to its peak of 26 in 1999, according to research and consultancy firm Cerulli Associates (CA).
The research group says this is partly due to the fact that joint ventures are not fool proof and sometimes fail, but also because of recent developments in many international markets that negate such alliances.
Nearly all the joint ventures in 2000 focused on Asia and Africa, accounting for almost 70% of the research, with three each in China and India, two in South Korea and one in Japan. This is unchanged from previous years, says the consultant, which shows that joint ventures have traditionally focused in the emerging and less developed markets.
Many Asian countries have restricted foreign fund management entrants to participation in joint ventures, says CA.
There were no joint ventures announced in Europe in 2000 and the consultant apportions this to UCITS regulations, which diminish the need for fully capitalised joint ventures with local fund distributors.
As of year end 2000, some 39% of cross-border fund management joint ventures were defunct or suspected to be defunct, according to CA. The figure is up from 26% at the end of 1998.
Cerulli Associates defines cross-border fund management joint ventures as alliances between two or more managers from different countries that gather assets for discretionary management in a separate business unit. The unit has to be owned by at least two commercial entities and none of them can own more than 80% of the equity.