Hong Kong-based Value Partners Group has laid off “a small number” of staff as it trims operations after warning recently that profits likely plunged as much as 89% in 2018, according to a spokeswoman for the asset management firm.
Value Partners has in recent months “been looking into ways that we can streamline our operations and optimise our resources” and “a resource optimisation exercise has been carried out”, the spokeswoman tells Asia Asset Management (AAM).
She declined to comment on a January 18 report in UK-based online finance publication Ignites Asia, which said Value Partners laid off 10% of its staff, including head of sales Eric Poon and Mak Ling Kai, co-managing director of quantitative investment solutions and senior fund manager.
According to the spokeswoman, the company has “identified a few business areas where resource allocation and efficiency can be improved” and that “a small number of staff from the areas were affected by the exercise”.
Value Partners has 230 employees following the layoffs. The spokeswoman declined to say whether the headcount will be further reduced.
The company warned on January 11 that its net profit may have slumped to HK$220 million (US$28.2 million) in 2018 from HK$2.05 billion in 2017, mainly due to lower management fee income and lack of gains from investments. It will release the official results in March.
Patrick Shum, director of investment management at Hong Kong-based Tengard Fund Management, describes the layoffs as “reasonable” for traditional asset managers like Value Partners.
“The bearish run of global stock markets has been eating into the managers’ performance fees and profitability, so they need to reduce manpower to keep their business afloat,” Mr. Shum tells AAM.
Leon Qi, regional head of Asian financials research at Daiwa Capital Markets Hong Kong Limited, remains optimistic about Value Partners’ long-term outlook because of the company’s fast expansion in China.
“We see [the company] sit in a sweet spot of enjoying China’s asset management industry opening up to foreign players, and its increasingly comprehensive product suite meets Chinese investors’ demand in overseas assets,” Mr. Qi tells AAM.
Value Partners was one of the first firms to set up a subsidiary in China designated as a wholly foreign-owned enterprise, a qualification that allows foreign asset managers to provide investment consultancy and fund management services to domestic investors.
The subsidiary, Value Partners Fund Management (Shanghai), was established in 2015 and launched its first onshore private investment fund a year ago.
Late last year, Value Partners also appointed Tianhong Asset Management Co., China’s largest asset manager, as master agent for its Hong Kong-registered flagship fund, the Value Partners Classic Fund.
Value Partners had approximately US$15 billion of total assets under management at the end of 2018, down from $16.6 billion in 2017.
