Mercer seeks to boost delegated investment business with BFC

Mercer, an international actuarial consulting firm owned by US-headquartered insurance conglomerate Marsh & McLennan, has acquired Tokyo’s BFC Asset Management Co Ltd for an undisclosed sum, according to an announcement from the company.

The logic for the move is to help Mercer win customers for its nascent “delegated investment business” under which some functions normally carried out by pension funds’ chief investment officers are mandated to third parties.

BFC was founded in 2006 and has recently been having a tough time winning new business.

Figures from the Japan Pensions Industry Database show that at the most recent financial year end on 31 March 2017 the firm had 65 domestic corporate pensions mandates worth 78.2 billion yen. JPID numbers are based on those which member firms submit to the Japan Investment Advisors Association.

Three years earlier BFC had almost twice as much with 118 mandates covering 139,733bn yen of assets.

The problem may have been in selling sophisticated products to corporate pension executives who have little time to develop expertise since they are moved around rather frequently as they continue to be cogs in their employers’ job rotation machines.

Companies may need to adopt a more finely tuned approach to management of their pensions when the era of low interest rates comes to an end and that, arguably, makes them more likely to consider using “delegated investment business” services.

As part of its positioning to meet this expected demand, Mercer started Mercer Investment Solutions in May 2015. It has reportedly yet to win a mandate but has been short-listed for some.

If marketing has been the problem then BFC seems to have found the right partner in Mercer as its press release on the acquisition is positively pulsating with promise — even on generalities.

Unquestioning coverage can be found here and here.

© 2018 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes big commitments of money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to and a link provided to the original text on that site.

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