When US financial institutions turn their gaze towards Europe they risk falling into a couple of traps. Namely, they assume that it is a ‘United States of Europe’ and that American products will meet local demand.
While an investment product may sell as easily in New York as it does in Texas; the same does not hold true of Spain and Norway – or even Germany and France.
And it is understanding these key issues that has been the driving force behind PGIM’s expansion across Europe, Kimberly LaPointe, head of PGIM Investments International, tells Expert Investor.
Rebranded from Prudential Investment Management in 2016, PGIM is the tenth largest asset manager globally, with $1.5trn in assets under management. Its parent company is US insurer Prudential Financial.
PGIM houses several independent, fully scaled, multi-affiliates; including Jennison Associates, PGIM Fixed Income, QMA, PGIM Real Estate and PGIM Investments.
“That’s what makes us unique,” LaPointe says. “Each of these independent managers is fully scaled and they are non-competing, in that they are each specialists in their asset class.”
LaPointe joined PGIM 15 years ago, tasked with growing the firm’s retail business in the US.
Relocating to London in August 2019 to head up PGIM Investments International, she was “really excited and energised by the opportunity to build off of the success that we had as a team in the US and replicate that in Europe”.
“PGIM Investments is the global manufacturer and distributor of our mutual fund products. Here in Europe, we have the PGIM Ucits funds, which is just shy of $10bn in assets.”
When it comes to distribution, the focus is on retail, financial intermediaries and private banks.
Piece by piece
Another trap that US financial institutions can fall into when trying to break into Europe is adopting a fly-in-fly-out approach.
Home to some of the oldest financial institutions in the world, expectations are rising for US companies to show real commitment – not only to the European market, but the individual countries as well.
“Over the last 36 months, we have taken a very incremental approach to how we’ve been building our presence in Europe. It has really been across two dimensions; building out our distribution teams in the core markets, while at the same time building relevant products,” LaPointe says.
Those markets are the UK, Netherlands, Switzerland and Germany.
“And to add a third to that, building out the necessary infrastructure to support our growth.
“It’s not just about making a splash with distribution and marketing. We believe it is critical that we also come to the market with the right infrastructure and relevant products.”
In a sense, LaPointe, with her experience, has brought the heart of PGIM Investments to Europe and combined it with the local expertise, garnered by hiring an established and local sales team.
“We are bringing the best of PGIM but delivering it in a way that’s relevant to this market. I have seen a lot of our competitors, who I have a tremendous amount of respect for, arrive with the best of intentions but bringing their current products, thinking ‘that’s going to work, right?’ or ‘over time, we’ll figure it out’.”
And the building of that foundation and infrastructure put the PGIM team in a good position when the unthinkable happened.
“I will never forget that day in March last year when I sent the team home. I remember sitting at my desk and hearing that other companies in Canary Wharf were sending employees home.
“It was early in the morning, the US wasn’t up yet, and I had to make the decision.”
Seven months after arriving in London, ready and raring to go, LaPointe sent her team home with no clear picture of how long they would be gone.
It was a bitter pill to swallow.
The last to leave the office, LaPointe says it was very difficult to stay positive. “We had doubled our assets in the last year, but at that point in time, all you had was the aspiration.”
But the work the team had done prior to March 2020 paid off.
“Those years of building out the product line, building out the track record and infrastructure were critical, because once that fateful day happened, we never came back to the office.
“Like our competitors, we had our ups and downs, but the sales team was able to reconnect with clients. As a new brand, it was more difficult to prospect, but part of our strategy was, although I was flown in as an expat, we committed to hiring local, seasoned sales people in each of the regions who already had established track records of working with clients,” LaPointe says.
“It wasn’t without a lot of sleepless nights and the timing could not have been worse, but I could not be prouder of the team.”
With the UK slowly emerging from restrictions, what plans does LaPointe have for the rest of 2021 and beyond?
“Our primary office has been in London for many years. We already had some hubs in Europe; for example Frankfurt, which was born out of our real estate business. We made the decision to still keep London as our hub, but we have now started to increase our presence in other European countries.
“I think you would expect to see us continue to add more presence in the continent.”
One area up for consideration is southern Europe. “I think we’re ready to start thinking about how to serve that market,” LaPointe says.
“We are currently considering how best to think about appropriate coverage of the Nordics. This is a market that, as we have been building out our ESG suite since SFDR came into effect in early March, we’ve been doing a lot of product development on the fixed income front.
“We’re pretty excited. We currently have two fixed income ESG funds and we anticipate building out that suite, which goes back to our premise that it is really important that, when we enter a market, we have the right product set as well as the right expertise to serve that market.”
She adds: “The global private banking market has been a core market for us, one of the reasons I believe we’ve been successful in Europe has been our ability to serve that global private banking market for which many of those relationships started in the US. Part of being a really good partner to those providers is our ability to not just deliver product, but deliver on the ground local support in the markets that matter to them. Having started here in Europe, we’re going to start to consider places like Asia.”