Foreign asset managment firms that have established an investment management wholly foreign-owned enterprise (IM WFOE) apply for the PFM licence, which enables them to develop onshore investment products for domestic institutional and high net worth investors.
Fullerton is the first Asian fund house to be granted a PFM licence. Fidelity International and UBS Asset Management were awarded PFM licences earlier this year. So far, only Fidelity has launched a product in China and plans to launch a second fund later this year.
Fullerton, which manages around S$17bn ($12.73bn) in assets, first established its China footprint in 2007, with a representative office housing onshore equity analysts, according to a statement from the firm. Fullerton has participated in various programmes that enable the firm to invest onshore, such as the qualified foreign institutional investor (QFII) scheme, its renminbi equivalent RQFII and the China interbank bond market.
China is the first office outside of Singapore where Fullerton is moving toward full-scale localisation, according to the statement.
Fullerton’s team in China has grown to 11 staff from six in 2016. The current Shanghai team comprises of investment, sales as well as general management functions, Mark Li, general manager of Fullerton Investment Management (Shanghai) and head of China sales, told FSA.
“We look to add on to our compliance and trading functions, as well as further build out our investment teams,” he said.
The firm is currently engaging with local investors and distributors as it prepares to offer private funds to qualified individual and institutional investors.
“As a start, we are working to launch an equity fund within the next six months,” Li said, adding that the firm is in “advanced discussions” with a local distributor.
“We are still in the midst of discussing and planning for other products as we propose to launch over the longer term.”
London-headquartered Man Group, which manages assets of around $95.9bn, first established its office in China in 2012, according to a statement from the firm. In 2013 it was one of the first firms to be granted quota to raise funds from domestic investors to invest offshore through the Qualifed Domestic Limited Partnership (QDLP) scheme.
“We strongly believe that there has been a growing appetite from the Chinese institutional investment community for the products we will offer under the new license, and we look forward to continuing to develop our business in the region,” Li Yifei, chairwoman of Man Group China, said in the statement.
Man Group did not say what kind of products it was planning to launch in China or gave a detailed breakdown of its offices’ capabilities. However, it faces a six-month deadline for launching a product after obtaining a PFM licence.
Asset managers planning to launch private funds first need to have staff and systems in place before applying for a PFM licence to make sure they are able to meet the deadline for launching a product, Charles Lin, Vanguard’s Hong Kong-based managing director and country head of China, said in a recent FSA interview.
Foreign firms that have obtained an IM WFOE are at different stages of obtaining PFM licences. Blackrock has applied for a private fund management licence with the intention of launching private funds. Aberdeen-Standard Life intends to obtain a PFM licence, following the recent appointment of Amy Wang, the firm’s Shanghai-based general manager of the firm’s WFOE.
Vanguard is still at the beginning stages in China and has not applied for a private fund licence, Vanguard’s Lin said. The firm doesn’t have investment professionals in its Shanghai office, but it has plans to build its investment management capabilities in the long-run.
At least a dozen other foreign asset managers have obtained investment management WFOE licences in Shanghai, but have neither applied nor been granted a PFM licence. They include Invesco, Allianz Global Investors, Neuberger Berman and JP Morgan Asset Management.
