Hedge Fund With $9 Billion in Assets Bets on Asia Post Brexit

Has Brexit Opened Up Opportunities in Japan?
  • Sparx to launch new fund focused on the region this year
  • Asian companies present ‘high growth, high ROE’ opportunities

Sparx Group Co., the Japanese asset manager that oversees about 951.5 billion yen ($9.3 billion), sees investment opportunities in Asian companies after the U.K.’s vote to leave the European Union.

Asia will be the driver of global growth amid the uncertainties in Europe over Brexit, Shuhei Abe, chief executive officer of Sparx, said in an interview in Tokyo Wednesday. Sparx plans to put together a fund as early as the Northern Hemisphere autumn, using part of the company’s 13 billion yen of cash and funds raised from investors as seed money to invest in the fastest-growing companies in the region, Abe said.

The U.K. vote prompted a flight out of risky assets amid uncertainties over the implications of the decision for the global economy. Investors are now looking to central banks and governments for support as they seek alternatives amid the market turmoil. The MSCI Asia Pacific Index gained the most in more than a week Wednesday, recouping some of the 3.7 percent drop the day after the U.K.’s June 23 referendum to secede from the EU.

“The problem the world faces now is no growth, and the global money needs growth opportunities,” Abe said. “Asia will be the center for growth, luring capital from all over the world.”

‘Exciting’ Growth

Sparx plans to start the fund under its Selective brand, whose assets under management surged to 81.2 billion yen as of March from 303 million yen a year earlier. The company has started visiting companies in the region that have high growth and return on equity, Abe said. The new fund will invest in India, Indonesia, Thailand, Malaysia, Hong Kong, Taiwan and China, he said.

“It’s really very exciting,” said Abe. “The growth they are achieving is amazing. It almost makes me want to relocate out of Japan.”

In a Bloomberg Television interview earlier on Wednesday, Abe said Japanese policy makers will act to safeguard the economy to cope with Britain’s vote to leave the EU. Further easing by Bank of Japan, or other steps from policy makers, are possible in July, he said.

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