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BNPP AM to launch ESG fund in China

BNP Paribas Asset Management will use the qualified domestic limited partnership (QDLP) scheme to launch an ESG equity product through its WFOE in Shanghai.
BNPP AM to launch ESG fund in China

The QDLP programme allows foreign asset managers to raise money onshore to invest in offshore traditional and alternative investments, including overseas equity and bond funds, hedge funds and real estate.

The firm’s announcement that its wholly foreign-owned enterprise (WFOE) BNP Paribas Overseas Investment Fund Management in Shanghai has received the approval follows the relaxation of China’s outbound investment schemes in late April.

A Hong Kong-based spokesman for the firm said it has received the confirmation from the local authorities that it was granted a $50m quota for the programme today.

The water-related strategy managed by Impax Asset Management will be launched in China. It is a global equity product that focuses on water-related companies and applies the principles of environmental, social and corporate governance (ESG) investing. BNPP AM owns about a 25% of stake in Impax.

In order to manage the QDLP scheme, the firm plans to hire up to ten more people for its China office and to double the headcount in the next two years. Half of them will belong to the division overseeing investments, according to the spokesman.

Danny He, general manager for the WFOE, will head the team for the QDLP scheme.

In a statement from the firm, Ligia Torres, chief executive officer for Asia-Pacific, said that China is a key growth market and her firm is now permitted to sell to domestic qualified high net worth and institutional investors that have been seeking to diversify their investments globally.

Mandy Lui, head of wholesale distribution for China, Hong Kong, and Singapore, said in an earlier interview that she believes high net worth clients in China are sophisticated enough for QDLP products.

“[China’s investors] realise that there will be volatility, especially in equity investments. They generally require us to present long track records and explain how the funds performed through different kinds of financial crises.”

She added that Chinese investors are more interested in innovative investment strategies, including ESG themes, compared to investors in Hong Kong and Singapore.

Apart from its access to QDLP investors, BNPP AM operates a Chinese-foreign joint venture, HFT Investment Management, and holds quota for the renminbi qualified foreign institutional investors programme.

Earlier this month, the authority increased the quota of Shanghai’s QDLP scheme to $5bn from $2bn for the first time since its unofficial suspension in 2016 to control capital outflows.

So far, excluding BNPP AM, only 15 firms have been granted a combined $1.23bn in QDLP quotas since the programme’s launch in 2013.

Other firms in the queue seeking official confirmation for the QDLP programme include Robeco and Manulife Asset Management, the online database of Shanghai’s Administration for Industry and Commerce shows. Legg Mason Asset Management also intends to establish and register a QDLP entity in Shanghai.



Three-year performance of the Parvest Aqua Fund versus its benchmark MSCI World Index and the sector

Source: FE. Fund NAV is converted in US dollars for comparison purposes.

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