Success Stories

Federated Hermes Japan Ltd Interview (July 2022)

Wataru Horii Federated Hermes Japan Ltd
Representative Director, Head of Distribution, Japan
Interviewer: Financial Services Agency (June 2022)

Company Profile
Company: Federated Hermes Japan Ltd
Established: August 2021
Main Business: Financial Instruments Business (Investment Advisory and Agency Business)
Financial Instruments Business Operator: The Director–General of Kanto Local Finance (FIBO) No. 3327

The logo of Federated Hermes Japan Ltd: Federated Hermes

Federated Hermes Japan Ltd (“FH Japan”) was established by Federated Hermes Ltd (“FHL”), which is based in London, UK, and invests in and manages stocks, bonds and alternatives in Europe, America and Asia. FHL has 14 offices globally, including Pittsburgh, London, New York, Boston, Singapore, Sydney, Frankfurt, and others. The ultimate parent company of FHJ is Federated Hermes, Inc. (FH), which is headquartered in Pittsburgh, USA. The Group's assets under management totaled approximately $ 631 billion as of the end of March 2022.

*Federated Hermes Ltd (“FHL”) is an English limited company with company number 01661776, incorporated on 3 September 1982.
(Introduction of the group company)

1. Federated Hermes's entry into Japan

Congratulations on your completion of the Investment Advisory and Agency Business Registration. Could you give us an overview of your company?

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.

Why did you decide to newly start an IAA business in Japan?

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.


2. All-in-English Registration Process

FH Japan became the 7th successful registrant to obtain a license by using the Financial Market Entry Office. What was your impression about this all-in-English registration process?

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.

FH Japan was the 3rd registered company accepted to Financial Start-Up Support Program which was newly started by JFSA and Tricor Japan. What is your impression of using this Program?

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.

What were your challenges entering Japan?

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.

Pictured with monitor, top from left to right: Dave Fitzharris (Head of Compliance, Federated Hermes Ltd), Nishil Patel (Project Manager of Business Change Division, Federated Hermes Ltd), bottom: Jenny Whiteman (Managing Legal Counsel, Federated Hermes Ltd), right side of monitor: Wataru Horii (Representative Director, Head of Distribution, Japan, Federated Hermes Japan Ltd)

3. FH Japan's Business Plans for the Future

How will FH Japan and your APAC team and London team be working together from now on?

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.

What are FH Japan's visions for the future?

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.


Wataru Horii
Federated Hermes Japan Ltd, Representative Director - Head of Distribution, Japan

Joined the firm in December 2021 to start the Japan office. Started career at Mitsui Trust Bank (Now Sumitomo Mitsui Trust Bank) in 1988. After getting MBA degree from Duke University in 1994, worked as portfolio manager for Japanese equity. In 2001, started work at Nikko Research Center as a pension consultant and gave advice to pension clients covering manager search, asset allocation, and risk management. In 2003, started work at Alliance Bernstein covering pension sales, consultant relation, DC promotion, and retail sales. In 2012, joined Pyramis Global Asset Management (Institutional arm of US Fidelity) to start Japan business. After Pyramis decided to shut down Japan business, joined Natixis Investment Management in 2013 covering pension sales and consultant relations.


Ernst Jakob Nilsson
Federated Hermes Japan Ltd, Representative Director
Federated Hermes Ltd, Executive Director – Head of Distribution, Asia Pacific

Head of Distribution for the Asia Pacific region for Federated Hermes. He is also a member of the Business Development Executive Committee and the Management Committee of Federated Hermes Limited.

Joined Hermes Investment Management (now wholly owned by Federated Hermes Inc.) in 2012 as a Director, initially focusing on promoting the firm's investment strategies to large European investors. In 2014, re-located to Singapore to head-up the firm's business development efforts in the Asia Pacific region.
Prior to Federated Hermes, spent 15 years on the sell-side working for Citigroup, Goldman Sachs, Lehman Brothers and Bank of America Merrill Lynch. Over the course of his career he has worked with a broad range of asset managers, investors, products, and geographies. Holds a Bachelor's degree in Literature from the University of Rochester, New York and has completed the Stanford-National University of Singapore Executive Program in International Management.