Manulife receives China WFOE licence
16 March 2017
Category: News, Asia, China, Global, Canada
By Hui Ching-hoo
Manulife Financial Corp (Manulife) has secured a licence that will allow it to expand its products and broaden its investor base in China through a new Shanghai-based wholly-owned subsidiary.
According to the Canadian insurance giant, the new subsidiary – Manulife Investment (Shanghai) Limited Company – is the first financial institution to be granted the investment company Wholly Foreign-Owned Enterprise (WFOE) licence from the China Securities Regulatory Commission.
In a statement, the firm claims this “paves the way for Manulife to provide its global public market and private assets solutions in the fast-growing asset management industry in China.”
“Being the first financial institution to receive the investment company WFOE status puts us in an excellent position to expand our range of global product offerings to investors in China.” Kai Sotorp, Manulife’s executive vice president, global head of wealth and asset management, says in the statement.
Manulife has two existing joint ventures in China: Manulife-Sinochem Life Insurance (Manulife-Sinochem) and Manulife TEDA Fund Management (MTEDA), which had around US$3.2 billion and $9.8 billion, respectively, in total AUMs as at the end of February.
A Manulife spokesperson tells Asia Asset Management (AAM) that the new subsidiary will not have any overlapping business with the other joint venture companies. The new entity aims to serve a broader investor base such as small- and medium-sized institutions, private banks and independent wealth platforms. Its offerings could range from traditional equities and fixed income products to private asset strategies such as timberland, farmland and commercial real estate.
China first granted WFOE licences to a batch of foreign asset managers in 2015, including Franklin Templeton Investments, Fidelity International, and Aberdeen Asset Management, as part of plans to liberalise the country’s capital market.
In June 2016, China set out requirements on how WFOEs and Sino-foreign asset management joint ventures could be registered under the Asset Management Association of China (AMAC) as onshore private fund houses.
Alwyns Li, a partner at law firm Deacons, tells AAM that Manulife seems to have stolen a march on other WFOEs to participate in onshore private fundraising by applying for the licence after the launch of the AMAC registration initiative. It may take longer for existing WFOEs to get the investment company qualification, he points out.
Mr. Li believes it is unlikely that other foreign institutions will rush into the WFOE market given its stringent conditions, such as the requirement that an applicant must own a majority stake in an existing entity in China.