Success Stories

Hermes, which originally started as the investment management division of British Telecom Pension Scheme, manages stocks, bonds and alternatives for institutional and wholesale investors, and is known for its deep experience and strength in ESG and stewardship in particular.
Federated Investors, Inc., was a Pittsburgh-based US company that manages stocks, bonds and alternatives, with strengths mainly in retail and short-term assets.
Following Federated Investor's acquisition of Hermes, it became Federated Hermes, a truly global asset manager. Our institutional and wholesale investment teams continue to work more closely together, benefiting from each others long experience across the globe. Federated Hermes is expanding its footprint through Asian markets, with Japan being a key part of the Asia Pacific Distribution Strategy.

Japan is one of the world's largest economies and its asset management industry's AUM continues to grow.

A lot of thought and effort by our Business Development Team has gone into where we think our products and strategies will be attractive to end investors.

We were quite sure that Japanese institutional clients would find our investment strategies interesting. Those investors tend to favour more conservative, less volatile strategies. We do a lot of that type of investing, so that was a big part of the reason we focused on Japan.

Once we identified Japan as an important market with demand for what we can offer, we needed to develop a plan to support this market properly.

At the end of 2019, 18 months after the acquisition of Hermes by Federated, the executives responsible for the APAC region put together an expansion plan for the region and presented it to senior management in our US headquarters in Pittsburgh, Pennsylvania. The plan was subsequently approved.

Up until 2020, all Japan related business was done from Singapore but that was clearly not the best model. We felt strongly that we needed a base in Japan and wanted to hire a high-quality, experienced senior professional to help us in this market. To find the right person, we needed to commit to this market, and that's what we've done.

We are very happy and excited to finally have a base in Japan, and completing the IAA registration has opened up a whole new way of interacting with clients with a much more professional approach.

We are planning to add people to Japan in the future. In the meantime, we are pleased to have completed the Investment Advisory and Agency registration with our new Representative Director in Japan, supported well by the rest of the FH Japan team who are outside the country, along with those from the wider FH team in London and across APAC.

We actually did a lot of work at the end of 2020, so perhaps we did not enjoy the full benefits of the all-in English process. However, once we were made aware that we could complete the application in English and were connected to the Financial Market Entry Office, the process has run very smoothly.

The support that we have received from the Financial Market Entry Office has been extremely valuable. The team of experienced professionals clearly took us through the regulatory license application process, made us aware of some of the more intricate rules and regulations that impact Asset Managers in Japan and the ongoing compliance resourcing requirements that the regulators expect foreign Asset Managers to adhere to when setting up in Japan. As usual with this kind of application, there has been several rounds of emails back and forth, but the responses were very prompt and straightforward.

Communication with Tricor Japan has been excellent, furthermore the reimbursement of registration costs is helpful for foreign asset managers trying to start their business on a small scale. In the initial Q&A session, they explained in detail their FSA program and what kind of support they could offer, which was very encouraging when starting a new business in Japan.

Overall, being able to communicate in English with the Financial Market Entry Office and Tricor Japan, has been very helpful.

One thing was finding the right information on the website.
When entering a totally new country with different legal and regulatory systems and rules originally written in another language, it is almost impossible to go through without getting the right advisor. At the early stage of planning, before officially appointing a law firm, we did lots of research on the website, but there were some challenges to ensure we were identifying the right licenses for our business. The Financial Market Entry Office and our law firms were instrumental in guiding us through this.

There is sense in the market that setting up in Japan is very complicated and time consuming. Based on our experience I would say that attitude is maybe a little bit outdated now.

FH Japan is part of our broader APAC business group. As such, many support functions will initially be handled by our London and Singapore offices.
From a compliance perspective, we have a local organization in Japan that we're working with, who are also in very close collaboration with our London compliance group. There's quite a lot of support in London that we tap into and it works well for the APAC entities. There is obviously scope to add personnel in those markets, which is very much part of our expansion plan.

We will first focus on building our brand in Japan by promoting our strength in ESG investment management services.
In addition, we plan to take full advantage of the Group's lineup of investment products such as stocks, bonds, alternatives, PE, private debt, and real estate to introduce products that truly meet customers' needs on a full-scale. We already had some success to date for our ESG/stewardship advisory business, Equity Ownership Services (EOS), which we hope to build on as well.