Principal GI eyes China WFOE, plans senior Asia hires

The US asset manager is planning to apply for a wholly foreign-owned enterprise in China by the end of 2015, AsianInvestor is told. And the firm is looking to hire a Southeast Asia CEO and a distribution chief.
Principal GI eyes China WFOE, plans senior Asia hires

US asset manager Principal Global Investors (PGI) is expected to apply for a wholly foreign-owned enterprise (WFOE) licence in China by the end of this year, a senior executive said.

The firm also plans to expand its headcount with the creation of two key regional positions: a chief executive for Southeast Asia and a director for third-party fund distribution in Singapore.

Meanwhile, the asset manager has outlined its expansion plans for exchange-traded funds (ETFs), following its launch of an active product in the US last month.

Kirk West, executive director and head of international offices, told AsianInvestor that PGI was preparing the necessary documentation for a WFOE application.

“We are strongly considering upgrading our representative offices in China to WFOE and I expect we are months away from submitting paperwork,” said West.

PGI undertakes a range of activities in China, including an institutional business and a joint venture asset management business with China Construction Bank. PGI aspires to be in the annuity business as well as to be more involved in the distribution business with private banks.

“We want to ensure the documents we are preparing will cover all the activities. That’s what we’re working through," said West.  PGI will be adding headcount in mainland China once it opens a WFOE office.

Meanwhile, PGI is close to hiring a director for third-party distribution in Singapore. “We hope to be in a position to make the appointment in the next few weeks,” said West.  The additional hire will report to Gaurav Kumar, head of fund distribution for the Middle East and Southeast Asia.

Currently there are four salespeople in Asia – two in Singapore and two in Hong Kong. The new hire will be added to the current four.

PGI is also looking to hire a country head covering Southeast Asia. It previously planned to hire a chief executive for the region.

"The way we treated the region is into North Asia, South Asia and the Middle East. There are senior people covering the North Asia and Middle East markets. Hiring someone for Southeast Asia makes more sense at this stage," said West, who is looking at both internal and external candidates.

Frederick Laydon, chief operations officer, is responsible for North Asia, while Wassim Nasrallah is PGI’s managing director and Middle East head.

In a previous report, PGI’s chief executive told AsianInvestor that the firm planned to launch an active ETF in the US. West said it launched the Principal EDGE Active Income ETF in July, and was listed on the New York Stock Exchange.

West said the plan for active ETFs was very much US-focused at this stage, though there had been discussions over bringing it offshore once it had built up a reputation. 

When asked how PGI would compete with popular ETF providers like BlackRock and State Street Global Advisors now it has moved into the ETF space, West said: “We have no intention to compete on the passive side. But if you are a good solutions provider, there is always a place for attractive active ETF.”

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