Money Manager Hopes New China Office Pays Off

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A lot of Chinese money has come to Los Angeles in recent years. Now, a big local money-management firm is heading east, seeing opportunities in China.

Wilshire Associates, a Santa Monica investment services firm founded by former rocket scientist – and space tourist – Dennis Tito, this month opened an office in Suzhou, near Shanghai.

Cecilia Loo, president of Wilshire Analytics, Wilshire’s technology and research arm, said the Suzhou office went from idea to reality in a little more than a year. The firm decided to take a look at expanding in China in January 2014. In April, senior executives visited Beijing, Shanghai and Suzhou. Eleven months after that, the office opened its doors.

Loo said Chinese economic policy created an opportunity for Wilshire Associates to tap into the emerging middle class there.

“China really started opening up the country to foreign investment,” she said. “Both for foreigners to invest in China and for Chinese to invest in foreign markets.”

The new office is in the Suzhou Industrial Park, home to some 600 financial services companies and 25 universities. Loo said the local government really rolled out the red carpet, providing tax incentives that made the venture more enticing for Wilshire. The office is home to 10 employees, with three to five more expected to be added this year.

The office will house a number-crunching analytics team and will be a base Wilshire will use in its effort to attract clients.

Loo said moving some operations to the office will result in real cost savings, but the decision to open the outpost was more about capturing business than saving a few dollars.

“The business opportunity and climate has advanced quite a bit,” she said.

Wilshire has a private equity office in Hong Kong, but Loo said it is important for the firm to establish a beachhead in China proper.

“They’re really two different economies,” she said. “To do business in China, you really need to have a local office.”

Hedging Bet

Century City private equity and debt giant Ares Management is expanding its reach into hedge funds, making a strategic investment in Deimos Asset Management, a startup fund in Purchase, N.Y. In Greek mythology, Deimos is the son of Ares, the god of war.

Deimos will be led by Patrick Hughes and Loren Katzovitz, who were partners at New York’s Guggenheim Partners, and Mark Standish, formerly of Royal Bank of Canada in Toronto.

Hughes and Katzovitz were most recently the co-heads of Guggenheim Global Trading, Guggenheim’s multistrategy hedge fund platform. They took control of the hedge fund through a management buyout, then turned it into Deimos with Ares’ backing.

“We are excited to work with this team to enter the large and rapidly growing hedge fund asset class, which represents 30 to 40 percent of all alternative investments today,” Michael Arougheti, Ares’ president, said in a March 3 press release.

Port Holes

Wealth manager Larry Palmer, who works at the downtown L.A. office of New York investment bank Morgan Stanley, has been closely following the recent slowdown at the local ports. While that was caused by a labor dispute, Palmer believes the harbor will be quieter over the coming years.

He pointed out that the Baltic Dry Index, which measures the cost of shipping major raw materials via the world’s oceans, recently hit its lowest number since it was created in 1985. That shows slowing demand, as the supply of major container ships isn’t all that flexible.

“Rates are at secular lows and are probably going to stay there,” Palmer said. “I think what the Baltic Dry Index is telling you economically is we’re in a period of slow, benign growth.”

Palmer pointed out the recent interest rate cuts in Europe and China as signs of a global slowdown that he believes will soon impact the United States.

“These other continents are exporting their deflation to us,” he said.

C-Suite News

London finance giant Barclays has appointed Jay O’Neil managing director and regional manager for wealth and investment management in Los Angeles. He was previously with Sydney’s Macquarie Group, where he was head of the private bank. … Century City activist hedge fund Red Mountain Capital Partners has named Matthew Hepler partner. He was previously with Relational Investors in San Diego, which wound down its funds late last year. … St. Louis financial services firm Edward D. Jones & Co. hired 69 financial advisers in the L.A. area in 2014. The firm plans to add 54 local advisers this year. … Brentwood accounting firm Sobul Primes & Schenkel has promoted Mark D. Umemoto to tax principal. … Glendora accounting firm Vicenti Lloyd & Stutzman has opened a downtown L.A. office at 915 Wilshire Blvd., across the street from the Wedbush Center.

Staff reporter Matt Pressberg can be reached at [email protected] or (323) 549-5225, ext. 230.

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