Ping An of China Asset Management (PAAMC) is set to launch its first offshore RMB bond fund in Hong Kong today and is aiming to raise up to Rmb500 million ($76.5 million) from its initial public offering.

The firm’s SIF-RMB Bond Fund is an open-ended unit trust to invest in offshore denominated fixed or floating rate instruments.

Timothy Chan, chairman of PAAMC, noted during a press conference in Hong Kong yesterday that the fund will principally invest in CNH bonds, for which the allocation can be up to 100%.

The investment scope also includes offshore RMB deposits and other offshore RMB debt instruments such as convertible bonds, commercial paper and short-term bills and notes. But synthetic RMB bonds are excluded.

Benjamin Rudd, PAAMC’s head of overseas investment, stresses that the fund is purely an offshore fund and does not seek access to the mainland market through mini-QFII. “We want to invest as soon as possible to capture the opportunities in the market right now,” he states.

At present there are several RMB fixed-income benchmarks, but PAAMC is not using any benchmark for this fund. Rudd explains that the newly established HSBC and BOCI benchmarks still lack a long-enough track record and so will be only used as reference at this stage.

Established in 2006 by parent Ping An Group, PAAMC is one of the largest Chinese asset management firms in Hong Kong with HK$28.9 billion ($3.7 billion) in AUM as at the end of last year. But it has lagged peers in terms of offering an offshore RMB fixed-income fund.

“We purposely waited for the right time to launch the fund,” Rudd explains, adding that he sees more liquidity both in primary and secondary markets now, offering a broad enough market for asset managers to add value for investors. 

Rudd argues that as a subsidiary of one of the largest insurance groups in China, PAAMC’s risk management capabilities will enable it to distinguish its RMB fixed-income fund from others.

“We have a very strong credit team in mainland China to analyse and identify credit rigorously to add value for our investors from a risk-return perspective,” he says. “This means that when we look at new offerings from mainland China issuers, we are not reliant on a rating agency.”

Starting as a life insurer, Ping An has developed into an integrated financial services firm providing insurance, banking and investment services. PAAMC serves as its international asset management arm in Hong Kong, both for local investors and to serve the overseas investment needs of mainland customers.

Alex Ren, general manager of Ping An Group, notes that the company has extended its investment capabilities from managing its own proprietary assets to aiding external third-party customers in recent years. “Going forward, this [increased] investment capability will have a significant impact on the performance of the whole group,” he adds.