Having set up a segregated account (SA) subsidiary in Shanghai's free trade zone, Axa Investment Manager's Chinese joint venture is planning fund launches, including an internet finance product aimed at corporate investors.
However, it is still awaiting clarity on regulations under the FTZ.
Shanghai-based Axa SPDB Investment Managers is targeting 50% growth in assets under management this year, chief executive Diana Yu tells AsianInvestor.
Last year the firm saw a 150% rise in AUM to Rmb32 billion ($5.27 billion), with Rmb25 billion in segregated accounts and Rmb7 billion in mutual funds as at the end of 2013.
The JV has established a three-part strategy based on mutual funds, segregated accounts and a segregated account subsidiary (the latter allowing it to buy primary-market assets), notes Yu.
She says 2014 represents a new start for the company now that it has put the finishing touches to its business by setting up the SA subsidiary, Axa SPDB Asset Management. The unit registered in the Shanghai free trade zone on December 4.
SA subsidiaries allow Chinese fund managers to invest in primary markets for the first time, and firms such as China Universal are already taking advantage of the new flexibility.
Axa SPDB’s range of investable assets has now expanded from listed securities to unlisted instruments such as private equity, limited partnerships, creditors' rights and investment trust products.
Axa SPDB AM finished its first project in December, an Rmb5 billion perpetual bond deal. It acts as investment manager for what it describes as a special asset management plan. Yu declined to provide more details.
Meanwhile, the SA subsidiary aims to do more self-developed projects this year, such as asset securitisation. But there is a lack of clarity on the details of what asset managers can do in the FTZ, so Axa SPDB does not yet have broader capabilities than fund houses registered outside the zone.
“We can’t prepare our products [in the FTZ] at this stage,” says Yu. “We have to decide the product specifications according to the prevailing regulations. But the regulations and related policies have not yet been announced.”
She hopes the zone will provide more business opportunities for cross-border investment. “If there is some initiative on QFII and QDII in the free trade zone, for example, our clients are interested in investing overseas, and we can collaborate with our shareholder Axa Investment Managers and leverage on their products and expertise," says Yu.
Meanwhile, the firm plans to launch four mutual funds in the first half of this year. For example, it aims to benefit from the internet finance phenomenon in China. Axa SPDB will partner an internet payment provider that facilitates online transactions to launch an internet finance money-market fund (MMF), although Yu declined to identify the provider.
Internet finance products in China have attracted huge inflows. The most notable example is Yu’E Bao, an investment service launched by Alipay, an affiliate of Alibaba that facilities online transactions for shopping website Taobao. Yu’E Bao is attached to an MMF launched by Tianhong Asset Management; the fund had Rmb250 billion in assets as of January.
Yu’E Bao and other services -- such as Licaitong from Tencent, another Chinese internet company -- mainly target individual investors, but Axa SPDB will try to tap corporate investors. Partnering the unnamed internet payment provider, which is understood to be active in corporate payments, the JV will seek to tap expected demand from small and medium-sized companies.
Other mutual funds Axa SPDB has in the pipeline include an equity fund and a quantitative product feature that uses a hedging strategy.
The Shanghai-based firm was set up in 2007. Shanghai Pudong Development Bank, Axa Group and Shanghai Dragon Investment have equity stakes of 51%, 39% and 10%, respectively.