Aberdeen set to attract onshore China capital

Added 7th July 2016

Aberdeen AM is set to become the first wholly foreign owned enterprise (WFOE) to receive investments from onshore institutional and high net worth investors.

Aberdeen set to attract onshore China capital

Last Thursday, Chinese regulators finally allowed WFOEs to register as private securities fund managers through the Asset Management Association of China (AMAC), which permits them to launch China-focused investment products for mainland high net worth or institutional investors.

“The confirmation by the CSRC that we can move forward with this license is welcome and we are preparing our submission to be a private securities fund manager,” said Alex Boggis, Hong Kong-based Managing Director at Aberdeen International Fund Managers in an email reply to FSA.

“The [investment management] WFOE is an initial step, but AMAC registration is the functional step,” said Chantal Grinderslev, director of operations at consultant Z-ben Advisors. “While possible, few firms would pursue AMAC registration until they could guarantee the launch of a fund in 2H16.”

It would take 20 days to get the AMAC approval, according to the association’s online FAQ. Z-ben said it might take another six months to register the new product.

Grinderslev added compliance issues will be the next critical issue for firms to launch product in onshore China.

Early movers

Aberdeen’s WFOE, set up in September last year, was the first structure to include the scope to become an investment manager in China.

Fidelity and US hedge fund Bridgewater Associates followed. They were granted such WFOEs in October and March respectively.

Earlier versions of WFOEs allowed firms to conduct an investment advisory business, like BNP Paribas Investment Partners, or research capabilities. Last month, Hang Seng Bank was also approved to own the first onshore fund house with a majority stake held by a non-mainland entity.

Fidelity International country head of China, Larry Chen, said the firm “is evaluating the related rules released last week.

“We are committed to China and in line with upcoming regulatory changes, we will look to expanding our presence there.”

Aberdeen officials added that the firm is also applying for an investment quota through the Qualified Domestic Limited Partner (QDLP) program, which would enable the firm to sell offshore products to qualified onshore investors.

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