Value Partners eyes sharia funds, plans US office

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Despite a 1H profit slide, Hong Kong-listed Value Partners said it intends to open offices in Malaysia and the US and possibly launch a ‘core China’ fund in Europe.

In Malaysia, the firm will explore managing shariah-compliant funds as well as roll out quantitative investment strategies with a Southeast Asia focus.

“The plan is to have the shariah funds locally-managed,” according to a spokeswoman for the firm. “They could potentially be sold to other Asean markets such as Indonesia.

“For our Malaysia office, we envision that it will eventually grow into an operation with on-the-ground investment professionals, business development experts and compliance representation.”

Additionally, by the end of the year, the firm expects to open a US office in Boston to strengthen fund distribution to institutional investors in North America, where management believes there is growing demand for China and Asia investments.

The group is headquartered in Hong Kong and has offices in Singapore and London.

In March, the firm’s UK subsidiary was permitted by the Financial Conduct Authority to provide regulated products. Currently, the firm distributes five equity funds and one fixed income fund in Europe. These include two Greater China equity funds, a global emerging market (GEM) equity fund and a GEM bond fund. Both GEM funds were launched last year in Europe.

The firm said it is considering launching a “core-China” equity fund in Europe, which will focus on China A- and H-shares.

Net profit down

In the same statement, the firm announced the interim financial results for the first six months of the year.

Net profit slid 11.5% to HK$194m ($24.75m) year-on-year after posting a historic high annual profit in 2017. The firm explained in the statement that the decrease was due to some mark-to-market losses on the investments under a weaker market backdrop.

During the first half, revenue continued to be driven by management fees and performance fees. Revenue rose 27.4% to HK$958m while gross management fees were up 30.4% to HK$712.9m and gross performance fees saw 127.4% growth to HK$50.7m.

At the end of June, the total AUM gathered from the mainland surpassed the $1bn market, up 30% compared to end-2017, the firm reported. Officials attributed the growth to new mandates, strong inflows into existing accounts and the launch of the first private fund management (PFM) product under its fully-owned entity in Shanghai.

The investment management wholly-foreign owned enterprise was granted a licence to manage private funds in November. The qualification enables Value Partners to distribute funds that invest in China to domestic high net worth and institutional investors.

As of the end of June, the AUM of its first PFM fund stood at around RMB150m, comprised of mostly client money invested and a minority of internal seed capital, according to the financial statement. The fund charges a performance fee, similar to most of its absolute return equity funds available elsewhere.

In July, the Shanghai entity registered two more equity funds targeting professional investors in China. All the onshore funds are managed by the Shanghai-based investment team, led by the firm’s investment director and head of China business Yu Xiaobo.

Additionally, the applications to distribute its flagship classic fund and a high dividend stock fund via the Mutual Recognition of Funds scheme are still pending approval by the Chinese regulator. Once approved, the products will be available for sale to retail and institutional investors in China.

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