Chinese wealth manager Jupai Holdings, which opened an office in Hong Kong in May, is preparing to offer real estate funds, funds of hedge funds and other private strategies focused on primary and secondary markets.
Zhou Cheng, head of Jupai Hong Kong Investments, said these funds would invest in global markets and be made available to Chinese high-net-worth investors (HNWIs), the firm’s core clientele.
The firm is developing three property funds to add to its existing Australian real estate strategy: two focused on the US and one on the UK. He declined to provide further details.
Foreign firms: long time coming
Zhou said it was working with the Hong Kong branches of Chinese asset managers on the products, because of the long onboarding process required to work with international houses.
Jupai does plan to onboard global asset managers, he noted, but it takes time to implement distribution agreements with such firms because of their sophisticated know-your-customer and anti-money laundering due-diligence processes.
Opening an institutional account with an international fund house can take up to six months, added Zhou, and in light of stricter regulations and compliance issues, it could now take even longer.
Jupai is focusing on real estate for its first products because it can leverage expertise from within its group. Jupai Holdings’ major shareholder is E-House China, a mainland company that provides real estate agency services to property developers and consultants.
The minimum investment for the property funds will be $1 million, and they are likely to be capped at around $30 million because of cross-border constraints that make it hard to get money out of China, said Zhou.
Jupai also intends to launch two funds of hedge funds that will invest in international hedge fund managers. He declined to identify any firms or strategies it was planning to include.
Meanwhile, Jupai welcomes partnerships, Zhou said, noting that it has Swiss private bank Julius Baer as a strategic investor. The firms share ideas on capital markets, clients and products, and may in future distribute each others’ products.
Other China-based wealth managers, such as Noah Holdings and CreditEase (also a peer-to-peer lending platform) are also making moves to build their selection of overseas-asset investments. In turn, foreign players are looking to make inroads in the fast-growing mainland wealth market; Credit Suisse, for instance, is targeting local partnerships, as reported.
China's HNWI population is among the fastest growing globally, with a compound annual growth rate of 12.1% between 2008 and 2014, according to Jupai’s research.
Jupai appointed Zhou in October last year as head of the Hong Kong arm, which acts as its international investment hub. It was set up in response to rising client demand for foreign exposure. He was previously executive director at Ample Harvest Finance in Shanghai and before that a director at Fosun Capital.
Zhou said the new branch put Jupai in a better position to partner international asset managers and expand its offshore offerings. The office has nine staff, including five in the investment team, and will build headcount as the business grows.
Jupai, listed in New York and set up in 2012, is growing fast through its China network of 58 client centres across 45 cities. it had AUM of Rmb21.4 billion ($3.32 billion), up 71.6% increase from December 31, 2015 and a 667% increase from March 31, 2015.