This week in asset owner history: Manulife seeks China pension partner
In mid-August 2016, Manulife said it was seeking a partner to enter China’s pension fund market.
Then executive vice-president and general manager for Greater China of Manulife, Michael Huddart, said the firm would like to have sole ownership of an onshore entity, while it also sees value in partnering with a local player for distribution in China.
At that time, Manulife already had life insurance and asset management joint ventures in China – the Manulife-Sinochem Life and Manulife Teda Fund Management, respectively. And it saw pensions as another logical step, especially as the country's public pension fund reforms gathered pace.
Back then, Manulife Teda ran funds that mainly invested domestically. But Huddart said it may start offering products with foreign underlying by making use of the qualified domestic institutional investor (QDII) scheme.
With the Hong Kong-China mutual recognition of funds scheme in place in 2015, the firm was also exploring the options for providing offshore funds to mainland investors.
HOW IT EVOLVES
A year later in November 2017, the life insurer announced the establishment of a wholly foreign-owned enterprise (WFOE), the Manulife Overseas Investment Fund Management (Shanghai), to facilitate offshore investment in mainland China and attract Chinese institutions to invest offshore.
Meanwhile, after China approved the launch of pension target funds in the mutual fund space in 2018, Manulife Teda was among the first pension target fund of funds (FOF) managers.
Now it has become one of the major managers in China’s 110-billion-yuan ($16.2 billion) pensions FOF market with a robust product line.
In June 2022, it was reported that Manulife has applied for its asset management arm, Manulife Investment Management, to take full control of its joint venture Manulife Teda Fund Management in China.
Currently, Tianjin TEDA International Holding owns 51% of the equity. Reuters said China's securities regulator had officially accepted the application to increase Manulife Investment Management’s stake in the joint venture to 100% from the current 49%.
As China officially launched the much-awaited private pension scheme, or the third pillar, in April this year, Manulife believes the scheme will unleash vast household savings in China, and regards it as a golden opportunity to further bolster its presence in the trillion-dollar market.
“Learning the experience of developed retirement markets, we foresee a huge assets under management (AUM) growth potential in China’s pillar two and pillar three retirement assets,” said Calvin Chiu, head of Asia retirement, Manulife Investment Management.
“If foreign asset managers can fully participate in the development of the domestic pension market, we believe that it will benefit the entire asset management industry by bringing international best practices and enhancing the industry’s professionalism,” Chiu told AsianInvestor in April.