Nearly a dozen state-owned life insurers and one state-owned fund manager in China have established an equity investment fund worth $4.9 billion. However, the contributions of each insurer have not been disclosed.
The fund is formed as a limited partnership, called Jiuzhou Qihang (Beijing) Equity Investment Fund, and was established in Beijing on April 20. Though the purpose of this fund has not been disclosed, it is presumed that it may serve to dispose of financial institutions’ risks.
China Pacific Life Insurance, Taiping Life Insurance, and PICC Life Insurance are among the other investors in the fund.
The 11 life insurance companies comprise China Life Insurance, CPIC Life Insurance, Taiping Life Insurance, PICC Life Insurance, China Merchants Life Insurance, and six bank-affiliated insurers that are ICBC-AXA Life Insurance, CCB Life Insurance, ABC Life Insurance, BoC Samsung Life Insurance, Bocom MSIG Life Insurance, and China Post Life Insurance.
Shenzhen Shenji Qihang Investment Development Co
The fund management company that is investing in the Fund with the insurers is Shenzhen Shenji Qihang Investment Development Co.
Shenzhen Shenji Pengcheng Investment Development has a stake of 81% in the company. The former was funded and established by Shenzhen Infrastructure Investment Fund Management and the actual controller is Shenzhen State-owned Assets Supervision and Administration Commission.
China Life Franklin (Shenzhen) Private Equity Investment Fund Management holds the remaining 19% of the fund management company. The controlling shareholder of China Life Franklin (Shenzhen) Private Equity Investment Fund is China Life Insurance Group.
Meanwhile, the private equity firm, co-founded by 11 insurers and a Shenzhen state-owned company, has reportedly disposed of risk assets of Huaxia Life Insurance Co., an insurance affiliate of Tomorrow Holding Co. Ltd., whose businesses were seized by Chinese regulators.
Jiuzhou Qihang (Beijing) Equity Investment Fund LLP was registered last week, according to registration records and its business scope is listed as private equity investment.
Heading to Hong Kong
Meanwhile, major China-based fund managers are moving to Hong Kong for the first time, in a bid to satisfy Chinese investors’ appetite for US dollar-based products.
The entry by the China-based funds into Hong Kong began last year as China lifted all COVID-19 measures, finally allowing high net worth Chinese families to travel and diversify their investments in their hunt for stronger returns.
At least eight mainland-based funds, including billion-dollar yuan quant funds, equity funds and mutual funds, have set up operations in Hong Kong in the past six months, and more than 10 others are headed there, according to a Reuters tally based on sources and public information.
Most of them are rapidly building offshore sales and research teams and preparing for the launch of their first US dollar funds. As mainland-based funds are yuan denominated, fund managers need to set up in Hong Kong to be able to offer foreign currency products.
The Beijing-based Ren Bridge Asset Management, which manages $2.5 billion, opened an office in Hong Kong in March and is in the process of applying for an asset management licence there.
Shanghai Qianxiang Asset Management, a quant hedge fund in China managing over $1.45 billion, received an asset management licence from Hong Kong’s Securities and Futures Commission in February and is developing its first global commodity trading adviser strategy for investing in overseas markets.
Even Wealth management firms such as Noah Holdings, China’s largest independent wealth manager, are also aggressively expanding teams in Hong Kong.