“We are now considering establishing our first wealth management centre in Hong Kong,” Jupai’s chief operating officer Weishi Yao told Fund Selector Asia.
“This is part of the renminbi internationalisation trend. Wherever the capital of high-net-worth individuals goes, we will follow,” he said.
Expected in Q1, the Hong Kong office will be located in Wanchai and act as a bridge, helping Jupai bring in more products from the US, Hong Kong and Singapore to meet demand in the mainland, Yao added.
To head the office, Cheng Zhou was hired as an executive director last October. Zhou previously held positions at Ample Harvest Investment Management and Fosun High Tech group.
In China, the firm plans to increase the number of wealth management centres to 80 from its current 60 by the end of this year, Yao said. In addition, it intends to grow its online platform. In 2015, it invested in Jubaopen, a Chinese peer-to-peer fintech firm that aims to connect borrowers with investors.
Fading fixed income
Despite recent market volatility in China, Yao said more Chinese high-net-worth individuals are looking for investment products that offer a floating rate of return. China has been cutting interest rates, which has dragged down returns for fixed income products.
“Previously, we saw most of the demand for products which will generate a fixed rate of return similar to bond-type products,” said Yao. “Now more and more clients are accepting floating returns, for example equity products.”
Jupai’s total assets under management were $1.5 billion as of September 30, 2015. The firm is overweight private equity and venture capital funds, with an allocation of 40% of AUM. Yao sees growth potential for venture capital, particularly with the Chinese government setting up lower tier exchanges, providing an avenue for smaller companies to list.
“As the old economy is phased out, China is now experiencing a new phase,” said Yao. “[There are a] lot of start-up companies within the internet area, many O2O [online to offline] companies, also many companies related to consumption.”
Reflecting his optimism towards the sector, one of the funds Jupai recently on-boarded is the Joyland & Yunfeng M&A PE Fund, supported by Jupai’s Joyland Asset Management and Yunfeng Capital, a private equity firm which counts Alibaba’s Jack Ma as one of its founders.
Another 35% of AUM is allocated toward real estate-related funds, 15% to secondary equity market funds and the rest to overseas funds.
Jupai was founded in Shanghai in 2010 and listed on the New York Stock Exchange in July last year. The US listing was intended to raise the firm’s profile and secure international capital for expansion, Yao said.
Last week, Jupai secured a strategic partnership with Swiss private bank Julius Baer, which agreed to take a 4.99% stake in the firm.
