The Canadian firm was granted an investment company WFOE licence in March 2017. The licence allows the firm to conduct cross-border investment business. It can offer its offshore funds to institutional asset managers in China and to source investments in China, for institutional clients abroad.
Manulife sees the new entity as a way to offer its private investment expertise to institutional investors in China, a spokeswoman said. For the inbound investments, the firm will target co-investment deals in commercial real estate and infrastructure.
The new entity is not an investment management (IM WFOE) licence and therefore does not allow the firm to offer onshore funds to domestic clients, the spokeswoman explained. At least a dozen other foreign asset managers have obtained IM WFOE licences as the first step toward establishing a domestic investment management business on the mainland.
Several foreign asset management firms have set up joint ventures over the past decade and many have exited such arrangements, often with a loss. While some argue the superiority of joint ventures as a method of establishing an onshore presence, others maintain that an IM WFOE is the better way.
Manulife’s new subsidiary, Manulife Investment (Shanghai) adds to its two existing joint ventures in the country. Manulife TEDA Fund Management Company had an AUM of $12.5bn on 30 September, as per the firm’s statement. It provides retail and institutional asset management services to domestic clients.
The firm also holds 51% of Manulife-Sinochem Life Insurance, which had $3.2bn of assets in February 2017.
