CreditEase, a Chinese peer-to-peer lending platform and wealth manager, is to take equity stakes in up to five more early-stage asset managers, as it seeks to build out its investment and wealth business. It is also planning to launch two private funds with existing partners.
CreditEase is in the final stages of discussing equity partnerships with another four to five fund firms, after screening 40 foreign managers and 20 mainland players in the past 12 months, said Richard Williamson, Beijing-based co-head of wealth management products.
The firm buys 35-50% of new and upcoming managers of traditional and alternative strategies – it is open to both minority stakes and joint ventures. Using an incubation-type strategy, it then gets involved in their governance and potentially also their back- and middle-office operations and fundraising.
There is no specific timeline for acquiring the new stakes, but CreditEase is in term-sheet discussions with one firm and in exclusive talks with anoter, said Williamson. It typically takes six months from introduction to a manager before the transaction is complete, he added.
Meanwhile, CreditEase plans to launch two private funds in China under partnerships it already has with New York-based high-frequency trading firm Sciencast Management and Israel-based venture capital investor Israel Innovation.
Sciencast had $125 under management as of June, but Israel Innovation's AUM could not be ascertained as of press time. Each firm plans to raise a second fund for CreditEase’s mainland clients in the second half of this year.
Founded in 2006, CreditEase has already confirmed equity partnerships with four managers since 2014, when it expanded into the investment and wealth business. In addition to its stakes in Sciencast and Israel Innovation, it also has a stake in Shanghai-based mutual fund house Noude Fund and two 50/50 joint ventures, one with Hong Kong-based private equity firm Roc Partners and the other with Israeli VC firm CEIIF.
Three out of the four existing partnerships are alternative managers, because CreditEase tends to advise mainland clients to include large alternatives exposure for portfolio diversification, similar to the approach taken by US endowment funds, said Williamson.
CreditEase’s clients are increasingly adding offshore exposure in venture capital funds, PE funds and real estate, he added.