Harvest Global Investments, the offshore arm of China’s Harvest Fund Management, is considering setting up European bases outside the UK to ensure its expansion plans are not disturbed by Britain's exit from the European Union.
“We will consider other locations, although we won’t abandon London because the UK is a big funds market,” said Ashley Dale, the firm’s chief business development officer.
“It might be that we will need dual locations – one on the continent and another in London,” he told AsianInvestor, but nothing has been decided as yet, with funds being distributed as before.
Harvest GI opened the London office in 2015, becoming the first Chinese fund manager to choose the UK capital as an overseas base beyond Hong Kong. The London office has three employees: UK chief executive Peter Lindqvist, one sales executive and one compliance professional.
Dale declined to name which alternative locations Harvest GI was considering against the backdrop of uncertainty created by the Brexit vote in June last year.
The fund house has joined a growing group of organisations mulling such a move as concerns rise over what many see as the lack of clarity over Brexit and how it will affect access to European markets.
Indeed, AsianInvestor had reported shortly after the vote that Brexit could push up the cost of distributing funds in the region and that it would prompt foreign asset managers to rethink their European expansion strategies.
Moreover, several banks, such as Goldman Sachs, JP Morgan and Nomura, have said they are moving staff to locations such as Dublin and Frankfurt in an effort to ensure they can trade freely throughout the EU.
Formal Brexit negotiations began on June 19, and a big gulf in expectation has emerged between the two sides over issues such as trade, market access and movement of citizens.
Despite the Brexit-related uncertainty, Europe remains firmly on Harvest’s radar, said Dale. The firm launched its first Ucits sub-fund in April, Harvest China Evolution Equity Fund. And in June it became the first firm to get equity funds approved under the Swiss-Hong Kong mutual recognition of funds scheme.
Yet some Chinese asset managers are said to have abandoned plans for a European footprint in the wake of Brexit. “If they haven’t already got a footprint in the UK, they’ve abandoned it completely now,” said one executive on condition of anonymity.
In August last year, for instance, mainland asset manager E Fund said it would delay its plans to set up a London office as a result of the uncertainty.
Even British asset managers have reportedly been bulking up their presence in Europe outside the UK. Jupiter, M&G and Intermediate Capital Group are among those to have done so, reported the Financial Times in late May.