BNY Mellon Investment Management (BNY Mellon IM) has set up a wholly-owned subsidiary in China after securing regulatory approval, a move that will allow it to distribute funds in the Mainland.
The US wealth manager says it has established the so-called investment management wholly foreign-owned enterprise (IM WFOE) in the Shanghai Free Trade Zone.
This will allow the company to “manufacture and distribute onshore private funds to Chinese high net worth and institutional investors”, BNY Mellon IM says in a statement on July 5.
Lindsay Wright, head of distribution and co-head of BNY Mellon IM, Asia Pacific, says the move provides “a foundation” and a “first step” for the company’s investment management business in China.
“In the short term, it will help us drive client connectivity with existing clients in China. Over time, it also provides a platform to establish onshore manufacturing for our investment boutiques and distribute domestic investment funds locally,” Ms. Wright tells Asia Asset Management.
The company is focussed on growing opportunities with leading financial institutions, governments and sovereign wealth funds in Asia Pacific, particularly institutional investors in tier-one markets such as Greater China, Japan, Korea and Australia, according to Ms. Wright.
“We see China as a growing part of our overall business strategy in Asia Pacific. China’s asset management market is one of the largest in the world at approximately US$5.5 trillion and growing,” she says.
She believes the company’s multi-boutique model can help to meet the increasingly sophisticated needs of Chinese investors who are seeking more diversified and greater choice of products and services.
The China Securities Regulatory Commission has allowed eligible foreign asset managers to operate private securities investment and fund management business in the country since June 2016.
Prior to that, foreign-owned enterprises were limited to providing consulting services, advisory services, client servicing functions, and ground support to their overseas parent companies. They could only distribute investment products as minority partners in joint ventures with Chinese firms.
BNY Mellon IM was managing $1.7 trillion of assets as of March 31, 2017.
