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November 23, 2020

Invesco aims to grow China assets to $100bn in three years

The latest to join the fray of asset managers looking to make inroads into China is Invesco, who reportedly intends to increase its AuM in the market to $100bn by 2023.

At present, the firm has around $70bn of China assets, which it aims to grow by over 40% in three years, the firm’s head of Asia Pacific Andrew Lo was quoted as saying by Bloomberg.

The three-year target is “not easy, but realistic,” believes Lo.

The firm’s onshore mutual fund joint venture (JV) Invesco Great Wall Fund Management will largely drive this growth, noted Lo.

The firm is making “progress” to increase its stake to 51% in the JV as the country scraps ownership restrictions, he stated.

Invesco currently has a 49% stake in the JV and has offered the local team more decision-making power compared to other global rivals, said consultancy Z-Ben Advisors founder Peter Alexander.

Invesco has already hired 27 employees for the JV so far this year and intends to expand the headcount further.

The roles will cover research and fixed-income investment to marketing and digital operations, Lo said.

The asset growth is expected to boost the firm’s position as one of the 15 largest mutual fund players in China excluding money market funds, added the report.

Lo said: “The biggest difference between us and many of the global competitors is that we’ve been doing this for 17 years.

“Now I think is really the inflection point.”

Invesco’s Shanghai-based wholly-foreign-owned venture has a private fund licence but primarily serves as an onshore research platform. Since its registration three years ago, it rolled out only a single offering.

A wind-down of the business is required under Chinese rules in the event of Invesco getting sole control of the mutual fund unit. However, Lo did not divulge any detail on the issue.

Invesco may also apply for a mutual fund advisory licence, Bloomberg said. It also reportedly plans to roll out some ETF products to cash in on the rising demand of global investors in investing in Chinese assets.

Lo added: “I don’t think it’s an easy market — There’s a lot of nuances. You have to be very nimble, very quick.

“It’s not going be an easy market for new entrants.”

China plans by other firms

Several firms are vying to tap China’s wealth market as the country relaxes restrictions to boost competition.

Recently, French asset manager Amundi announced a new JV with Chinese firm BOC Wealth Management.

US-based asset management BlackRock too received the approval to establish a mutual fund arm in China.

The firm recently also got the regulatory nod to set up its China wealth management JV with Temasek and China Construction Bank.

Further, JPMorgan, along with Credit Suisse, UBS, Goldman Sachs and Morgan Stanley were cleared to acquire a controlling stake in their China securities JVs.

 

 

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