ECM Libra expects AUM to grow 10-20% this year

KUALA LUMPUR: ECM Libra Financial Group Bhd, which is evaluating business opportunities with cash in hand of about RM22 million, expects subsidiary Libra Invest Bhd (LIB) to see a 10%-20% growth in its assets under management (AUM) this year, after a dip last year.
Fund management is the group’s main revenue source, representing 50% of the group’s revenue for the 11 months ended Dec 31, 2016. LIB manages assets through unit trust funds, wholesale funds, as well as portfolios of privately managed funds on behalf of high net worth individuals, corporations and institutional clients.
LIB CEO Jason Lee said as at March 31, 2017, its AUM stood at RM4.83 billion, compared with RM5.6 billion as at Jan 31, 2016. The fall in AUM last year was mainly due to the movement in cash management funds. It starts its new financial year ending Dec 31, this year.
He said if the market continues to remain robust this year, a 10%-20% growth target is a fairly conservative estimate.
“A lot of it depends on the market as well. Because we deal with both unit trust and private high net worth individual basis, some of the fund flows can be fairly volatile. If the market for the second half this year goes bad, you’re likely to see some withdrawals and people will be less inclined to put money,” he told reporters after ECM Libra’s AGM yesterday.
Lee said LIB will focus on rebuilding its distribution network this year, after going through an internal reorganisation last year that includes closing down some six branches. It plans to grow its sales team to 15 people from 10, as well as expanding its sales channel with the institutional unit trust advisers, private banking and financial planners.
“We’re going all out in terms of every channel to redevelop the distribution network,” said Lee.
He added that there are pockets of opportunity for fund management as certain segments of the market continue to be neglected, such as the segment between the normal mass market and private banking clients.
“We see growth from those with a net worth of RM10 million-RM15 million, who have liquid assets of RM1 million-RM3 million to invest,” said Lee.
From a product offering standpoint LIB has 14 unit trust funds, which it is reviewing to meet market demands. This could lead it to closing and launching funds over the next two years.
“From next year onwards, we will be more aggressive once we reorganise the product offering,” said Lee.
He added that it is also looking at working with third party service providers in offering trust and tax services to some of its existing clients.
“We’re looking at additional services rather than just portfolio management services in terms of delivering returns, be it advisory on estate planning, set up trust and so on. It’ll be a more wholesome (approach) on how to manage assets,” said Lee.
LIB will also continue to explore new ways of doing business in relation to emerging financial technology (fintech) and robo advisor as a way to help investors at large.
Meanwhile, ECM Libra managing director Lim Kian Onn said it has been on lookout (for opportunities) since 2013.
“We already have an existing core business in asset management. We maintain that core business and build upon the core business. But that (fund management) is not a hugely profitable business, the margins are thin, so we’ll keep looking,” Lim explained.
Adding that the group is “opportunistic” and will consider investments that have an internal rate of return of 20%, Lim said it has submitted bids for projects in “different” areas.
“If there’s any opportunities that makes sense, that has got longer term potential that adds on to financial services, we’ll do it. What that is, whether it is property development, mining, whatever... we don’t know at this point in time. We’re still evaluating,” said Lim.