Seoul-based Hanwha Asset Management’s wholly foreign-owned subsidiary (WFOE) in Tianjin last Friday received a private fund management (PFM) licence in China, according to records from the Asset Management Association of China (AMAC).
A PFM licence enables foreign entities to develop and sell funds investing in onshore assets to domestic qualified investors, which include institutional and high net worth investors.
Hanwha AM is the first and currently the only foreign asset manager that set up a PFM WFOE in Tianjin, a northern city near Beijing, according to Douglas Cha, the WFOE’ CEO.
“We agree that Shanghai or Beijing has a good environment for financial business, but at the same time, the competition is fierce. As one of the four municipalities under the direct administration of Chinese central government, Tianjin is a well-developed city which has top-notch universities and a sizable market with a total population estimated at 15.6 million in 2019,” Cha told FSA.
The firm plans to launch growth equity funds, with the first product expected to be rolled out by the first quarter next year.
“We believe that China equity market will continue to have good performance, thanks to its big consumption market, improving technology and efficient, flexible systems,” he added.
Developing domestic capabilities
This is not the first time that the firm is investing in China’s onshore markets. Records from the State Administration of Foreign Exchange show that the Korean firm has previously received quotas for both the qualified foreign institutional investor (QFII) and its renminbi equivalent (RQFII) programmes. The QFII and RQFII schemes enables foreign entities to invest in China’s onshore markets.
“Hanwha AM has been investing in the mainland for more than 10 years, but it is not 100% equivalent to domestic investment capabilities from the perspective of domestic clients. Hence, we will focus on building a stable on-shore track record at the beginning,” Cha said.
Hanwha AM’s WFOE now employs seven people, which include four that are engaged in investment and research, according to Cha.
The WFOE was established in 2016, with a registered capital of $10m. It is also the second Korean asset manager authorised to have PFM license in the mainland, the other being Mirae Asset Global Investment, which manages three PFM products.
Other firms that have obtained the PFM qualification this year include Income Partners, Russell Investments, Schroder Adveq, BEA Union Investment, Power Corporation of Canada, Paris-based Metori Capital Management and Edinburgh-based Baillie Gifford and Singapore-headquartered iFast Group.
In total, around 30 foreign asset managers have been granted PFM licences, with at least 90 PFM products having been approved by the AMAC, according to its records.
Hanwha Asset Management in South Korea was established in 1988 and manages around $80.2bn in assets, according to the firm’s website. It also has a subsidiary in Singapore, which manages equity and alternative investments focusing on the Asia market.
