ING Direct 2002 Annual Report Download - page 48

Annual Report 2002 · ING Group 45
Asset Management
a leading developer of shopping centres, was
gained. With the integration of Filo, the
developer acquired in late 2001, Spain has now
become an important and profitable market
segment for ING Real Estate. New joint ventures
were established to develop logistic real estate
and car parking facilities in Europe.
New funds were launched, for example the
successful ING Logistics Property Fund Europe
and the ING Retail Property Fund Australia. ING
Real Estate saw entrance of new investors for
many of its flagship funds. New capital commit-
ments in 2002 by third-party investors totalled
EUR 3.4 billion.
In 2002, ING Real Estate integrated the
wholesale real estate financing businesses of
Westland/Utrecht Hypotheekbank and ING
Bank. The new combination is leading in the
Dutch wholesale market for real estate financing
with a loan portfolio of EUR 11 billion.
ING Real Estate also manages EUR 8 billion
in property for ING Insurance. In 2002, this activity
made a substantial contribution to Group profit.
Alternative assets
With the exception of European buy-outs, the
private equity markets showed dismal, sometimes
negative, returns in 2002. Parcom, ING’s captive
private equity unit, fortunately only suffered
limited damage in the wake of the dot com
collapse.
Baring Private Equity Partners successfully
closed its second fund focused on Asia with
EUR 245 million. It also raised the first direct
investment fund in Russia since 1998. The new
Russian fund closed at EUR 195 million. Pomona
Capital, part of ING Investment Management,
closed a new fund of private equity fund
products. The fund raised EUR 524 million versus
its original target of EUR 381 million.
The hedge fund assets are principally
managed by ING Investment Management in the
US. The funds performed well against
benchmarks and peers, but this could not
prevent losses being realised on some of ING’s
seed capital investments. Especially the
structured credit products showed negative
returns due to the very high default rates in
high-yield and leveraged loan markets over the
last three years.
Fund administration and trust
services
The continuing trend to outsource non-core
functions by asset managers is a stimulus to
ING’s fund administration business. For this
business economies of scale also apply,
resulting in a further consolidation of the
industry. From offices in London, Guernsey,
Dublin and the Isle of Man, the Financial
Services Group of Baring Asset Management
provides a comprehensive range of fund
administration, custody, trust, banking and
accounting services to institutional and retail
collective investment schemes and corporate
and private clients. Assets under administration
were EUR 62 billion. The Financial Services
Group has built an excellent reputation as an
offshore administrator of private equity funds
and hedge funds. This niche business continued
to grow, despite a significant reduction in new
fund launches.
ING Trust specialises in trust services and
the formation and management of companies
used for, amongst other things, tax planning,
estate planning and asset protection. ING Trust
is a leading player in the Dutch market for
offshore trust services, serving both corporate
and private clients.
Outlook
Asset management continues to be a highly
attractive business for ING thanks to continuing
growth prospects and low capital utilisation.
The new regional structure of ING Investment
Management, linking ING’s investment engine
more closely with the distribution channels,
strongly reflects the importance of asset
management for ING’s retail strategy world-
wide. ING will step up its investments in order
to further improve the asset management
platform to ensure that also in the coming
years top-performing investment products can
be delivered.
In the short term the business remains
vulnerable to adverse market price develop-
ments, but longer term it is expected that the
asset management industry will continue to
expand rapidly at profitable margins. ING Asset
Management is well-positioned to benefit from
the expected rebound.
 
Fund administration for
third parties continued to
grow
—
Baring Asset Management
Financial Services Group
now has EUR 62 billion
assets under administration
—
Asset management remains
vulnerable to short-term
market developments
—
ING well-positioned to
benefit from market
rebound