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Scottish manager Baillie Gifford’s China unit gets nod to sell private funds

Ballie Gifford
By Hui Ching-hoo   
September 25, 2020

Scottish fund manager Baillie Gifford’s wholly-owned China unit has been approved to sell private funds to wealthy Chinese individuals.

The unit, Baillie Gifford Investment Management (Shanghai), was set up in September 2019 as a wholly foreign-owned enterprise or WFOE.

It has now registered as a private securities fund manager with industry group Asset Management Association of China – a prerequisite to launch private funds – and opened an office in Shanghai, Baillie Gifford says in a statement in a statement on September 23.

“As China market is one of the key strategic focuses for Baillie Gifford, the Shanghai office is to strengthen our investment research on China and better serve clients by being closer to the companies, investors, academia, and business partners,” a Baillie Gifford spokesperson tells Asia Asset Management.

She says the company’s private funds will focus on Chinese equity strategies for now.

There are approximately 60 WFOEs in China, a designation that allows them to operate investment advisory services. Around half of them have registered as private securities fund managers, and 23 have launched products, according to figures from Shanghai-based investment consultancy Z-Ben Advisors.

Foreign asset management companies are also allowed to do business in China through joint ventures with local partners. Beijing scrapped foreign ownership limits in the joint ventures earlier this year.

Baillie Gifford, which hired Amy Wang from Aberdeen Standard Investments as head of China last year, says it has been recruiting local talent, including in operations, investment research and trading. Linda Lin, its head of investment research, has relocated from Edinburgh to China to support the expansion.

“We hope that combining knowledge from the team on-the-ground with broader perspective from investment teams in Edinburgh will allow us to assess the opportunities with greater insight, in the search to find China’s future winners,” John MacDougall, chairman of the China unit, says in the statement.

Edinburgh-headquartered Baillie Gifford had around £262 billion (US$358.6 billion) of total assets as of June 2020.

Earlier this month, the asset manager cut its shareholding in US electric vehicle manufacturer Tesla Inc. from 7.6% to 4.25% to avoid overexposure to an individual company. It earned a profit of $17 billion from the share sale.