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BEA Union preps first onshore China fund

The firm believes there are opportunities for selling private funds in the Greater Bay Area.
Skyline of CBD City, Shenzhen

Hong Kong-based BEA Union Investment’s wholly foreign-owned enterprise (WFOE) in Shenzhen has received a private fund management (PFM) licence from the Asset Management Association of China, according to a statement from the firm.

A PFM licence allows managers to develop and sell onshore funds investing in domestic assets to China’s qualified investors.

The development comes after the firm established its WFOE in November 2017. The Shenzhen office now has six staff, which includes two investment professionals specialising in onshore China equities and another in fixed income, according to a Hong Kong-based spokeswoman of the firm.

The firm expects to launch its first onshore fund by the second quarter, the spokeswoman said, adding that it is likely to be either a mixed-asset fund or an equity-biased fund.

Without naming any firms, she said that BEA Union will partner with local securities firms that actively distribute private fund products.

As of the end of October, there were nearly two dozen foreign PFM licence holders that have launched 56 onshore funds, according to a Cerulli Associates report.

Besides its PFM licence, BEA Union offers two Hong Kong-domiciled funds to mainland investors via the Mutual Recognition of Funds (MRF) scheme.

As of the end of September, the firm manages around $11.3bn in assets, according to the statement.

GBA opportunities

While most WFOEs are based in Shanghai, BEA Union decided to set up in Qianhai in Shenzhen, the financial hub of the Greater Bay Area (GBA), to be close to the firm’s Hong Kong headquarters.

Besides its proximity to Hong Kong, the firm believes that the GBA will provide good business opportunities.

“We can see substantial potential in the development of private funds in China, especially in the Greater Bay Area,” Elenor Wan, the firm’s CEO, said in the statement.

“The population in the GBA exceeds 71 million and contributes one-eighth of the country’s GDP, which represents excellent opportunities for asset managers to provide wealth solutions for high net worth individuals and institutions.”

Other firms are also eyeing opportunities in the GBA, especially since officials in Hong Kong and China are planning to establish a cross-boundary wealth management connect programme. Under the programme, residents of Hong Kong and mainland cities in the GBA will be able to invest in wealth management products in each other’s market through the banking systems.

Part of the Bonhill Group.