Hong Kong’s Value Partners is beefing up its China team and seeking a licence for onshore private fund management (PFM), after last week naming Yu Xiaobo as Shanghai-based head of its mainland business.
The firm hired a portfolio manager, Luo Jing, in June, but did not say whether he had replaced anyone. Jing, based in Hong Kong, was previously an associate director at HSBC Global Asset Management focusing on China investments. He has also worked at Shenzhen-based Bosera Asset Management.
Last month the firm also brought in Jenny Jiang to head the legal and compliance team in Shanghai, which is now three-strong, including Jiang. She was previously senior manager of legal and compliance at Huatai Securities Asset Management.
Plans and strategy
Value Partners hopes to win the PFM licence soon, which would allow it to launch and manage products for onshore institutional and high-net-worth investors, said Yu, who is also an investment director.
“After that we will launch our own-brand products, instead of simply being an adviser,” he told AsianInvestor. “Once the PFM licence is granted, our initial focus would be on introducing China equity funds onshore.”
Yet Value Partners may find it tough to compete for business on the mainland, as it is neither a Chinese firm nor a large international player with a strong global brand. Still, it has operated onshore for close to a decade, so will be well known locally, at least by Chinese institutions.
Yu declined to comment on the strategy the firm had in mind to compete in the mainland market or on the kind of talent it was looking to bring in.
Before Yu’s appointment, the management team in Hong Kong had overseen the mainland operation. But Albert Teoh resigned last month from his role as Hong Kong-based managing director of China business. This is one of several senior staff changes at the fund house since new chief executive Au King Lun took over in December.
The China team now comprises 25 members, including fund managers, analysts, salespeople and compliance and operations staff. Around one-fifth of them are in Hong Kong, while the rest are in Shanghai or Beijing, said Yu, and more onshore additions are planned.
A solid base
The AUM of the China business is about $500 million to $600 million, accounting for about 4% of the firm’s $15 billion in AUM, said Yu. This includes $100 million in qualified domestic limited partnership (QDLP) quota and advisory mandates from institutions, said a company spokesperson.
The fund house now has two wholly foreign-owned enterprises (WFOEs) in Shanghai, one for enabling eligible Chinese investors to invest overseas under the QDLP scheme, and another one to obtain the PFM licence to tap the onshore market.
Value Partners is also waiting for approval under the mutual recognition of funds (MRF) scheme for its flagship Value Partners Classic Fund.
Meanwhile, competition is heating up among foreign asset managers in China. Fidelity and UBS Asset Management already won PFM licences, in January and July, respectively, and more awards are thought to be imminent. In total, at least 14 overseas firms have received IM WFOE licences, making them eligible to apply for PFM licences.