A “private securities fund” management firm in China is one that is authorised to sell products only to institutional investors or high net worth individuals.
The mutual fund licence now allows the newly-created firm, Pengyang Fund Management, to sell products in China’s huge retail investor-dominated market.
The owners of the new firm include Yang Aibin, a veteran bond manager who currently runs the bond-focused private fund house Pengyang Investment Management Company.
He holds 55% of the new firm with a registered capital of RMB 100m ($15m), according to a June 28 document (in Chinese) from the China Securities Regulatory Commission. Shanghai Huashi Investments, a private fund house, owns the remaining 45% stake in the new firm.
Yang was once the chief fixed income investment officer at China AMC before setting up his own private fund firm in 2011. The latter has about RMB 40bn of assets under management, according to a report by Shanghai Securities News.
Because the Pengyang Fund can also manage products targeting professional investors, Yang is expected to close his existing business and transfer the clients to the new firm, the report said. The new business will remain bond focused.
The fact that the first mutual fund licence was granted to a private fund house suggests that foreign firms such as Aberdeen and Fidelity may also benefit.
Earlier this month, the regulators allow their investment management-type wholly-foreign owned enterprises (WFOEs) to register as “private securities managers”. In principle, they could eventually apply for a mutual fund licence, allowing them to sell to retail investors.
Rise of mutual fund houses?
In 2014, the CSRC relaxed the rules to allow experienced individuals or private fund management firms to apply for a mutual fund licence.
To qualify, a private fund management firm needs to have a three-year track record with average annual assets under management of no less than RMB 2bn.
Since then, three mutual fund houses have been set up by individuals. There were also two private equity-focused firms that successfully opened a mutual fund business.
In total, six mutual fund licenses have been granted this year, including one majority-held by Hang Seng Bank.
Another one recently approved is Huatai Insurance Baoxing Fund Management, according to the CSRC. Huatai Insurance holds a majority stake of 80%, with the rest held by five asset management firms.
A number of insurers or their asset management arms are also looking into mutual fund operations, as reported earlier.
