Shenzhen-based fund house Penghua Fund Management says it has raised Rmb2 billion ($293 million) for its new A-share fund listed on the Shenzhen Stock Exchange.
The fund is built on a Listed Open Fund (LOF) architecture, a model that combines the characteristics of both an open-ended and a closed-end fund, in a way that allows investors to trade the fund on an exchange, as well as engage in offline subscription and redemption with the issuing house. LOFs originally came about when China was attempting to develop an ETF-like scene when local liquidity could not yet fully support a market-making capability.
Managed Yang Jing, the fund invests in top blue-chip names listed in Shanghai and Shenzhen and is 95% benchmarked against the CSI300 Index, with the remaining 5% against the local interbank market benchmark interest rate for liquidity purposes.
ICBC is the fund's custodian. With its original fundraising effort garnering just Rmb200 million (lower than which the fund would have been pulled), Penghua's launch of the Penghua 300 Fund has been a success.
Aside from its own direct sales channels in Shenzhen, Beijing and Shanghai, Penghua has been able to line up key distributors in this deal, including ICBC, the China Construction Bank, the Agricultural Bank of China, Bank of China, Bank of Communications, China Merchants Bank, Shenzhen Development Bank, Ping An Bank, Citic Bank, Minsheng Bank, Everbright Bank, Bank of Beijing, Bank of Ningbo, as well as a number of securities companies.
In particular, the firm has been able to attract retail investments which now make up a bulk of its assets, even though highly similar products linked to the CSI300 Index already exist in the market. These include funds previously issued by China Southern, ICBC Credit Suisse and Guangfa Management.
Yang has been working for Penghua since 2001. Previously, he was an assistant fund manager to Penghua's China 50 fund and the Penghua Sector Growth Fund. He had taken nine months of leave to work as an investment manager for a brokerage firm from September 2006 before rejoining Penghua as a fund manager to its Select Stock Fund in April 2007.
Prior to Penghua, Yang had been a sector analyst with Changsheng Securities.
Founded in 1998, Penghua is one of the 10 oldest fund houses in China's asset management industry. According to data provided by Shanghai research house Z-Ben Advisors, as at the end of 2008, the firm manages Rmb47.69 billion ($6.99 billion) in China and enjoys a market share of 2.46%.
In April 2007, Italy's Eurizon Capital received approval from the China Securities Regulatory Commission to invest in the fund firm. The company is now a three-way joint venture that is 51% owned by Guosen Securities, 49% owned by Eurizon and 1% held by Shenzhen Brilliance Investments.
The company has been holding onto an approval from the CSRC to develop its own QDII product for over a year since May 2008. However, it has not finalised any plans to develop in this area to date.