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Foreign managers continue to move into China

Barings, Income Partners and Van Eck Associates have recently set up in China, while three other firms secured a licence to distribute funds to domestic professional investors.

Taking the first step toward onshore fund distribution, UK-headquartered Barings established its investment management wholly-foreign owned enterprise (IM WFOE) on 3 August, according to filings with the Shanghai Administration for Industry and Commerce (AIC).

Liu Zhaoying, an SFC-licencee, is the legal representative for the Barings onshore entity, according to AIC.

Likewise, Hong Kong-based Income Partners registered its onshore presence with Amac last week. The WFOE is currently represented by Desmond Kuang, Hong Kong-based portfolio manager and senior analyst for Asia fixed income.

For these two firms, the next step would be to register for a private fund manager (PFM) or a qualified domestic limited partner (QDLP) licence with Amac. If the licence is approved, the firms would have six months to launch an onshore fund.

In July, New York-based Van Eck Associates filed a request to convert its investment advisory WFOE into an investment management entity.

The conversion, which is still pending approval, would also put the firm on the path to a PFM or QDLP licence.

The advisory WFOE, set up in 2013 in Shanghai, is headed by Patty Ye, managing director for Greater China at Van Eck Global.

In Asia, the firm distributes products to mainly professional investors. According to FE Analytics, a total of 12 exchange-traded funds and two Ucits products managed by Van Eck are available for sale to accredited investors based in Singapore.

Onshore funds coming

Allianz Global Investors, Manulife Asset Management and Mirae Global Investments, which already have the IM WFOE structure, have each secured a licence for selling their funds to domestic qualified investors via the QDLP programme.

Although PFM and QDLP licences have some similarities, there is a key difference. PFM licence holders are permitted to invest onshore to serve domestic qualified investors while the QDLP managers are allowed to raise money domestically to invest in offshore traditional and alternative investments, including overseas equity and bond funds, hedge funds and real estate.

Amac’s database revealed that the WFOE of each firm obtained the qualification last week. For each new licence holder, the association places a six-month deadline for the first QDLP product launch.

Earlier this year, BNP Paribas Asset Management became the first firm to obtain the QDLP licence after officials announced they would resume granting the quota for the scheme in April.

Neuberger Berman, Aberdeen Standard Investment and Alliance Bernstein also secured QDLP licences in mid-2018.

Therefore, by February 2019, there is expected to be at least six more products rolled out by the licence holders.

Other firms in the queue which are also seeking official confirmation for a QDLP licence include JP Morgan Asset Management, Robeco and Nomura Asset Management.

Part of the Mark Allen Group.