Cathay Site bulks up for external mandates

Cathay Securities Investment Trust (Site) is being billed as Taiwan’s largest fund house after taking over the domestic equity portfolio and related personnel of sister subsidiary Cathay Life.

The integration is tipped to bolster Cathay Site’s standing when it bids for external mandates from institutional investors, as well as support the firm’s expansion plans in mainland China.

At the same time, Cathay Site has spoken of its ambitions for a fledgling joint-venture fund management cooperation in Beijing with China Development Bank Securities that it hopes will outstrip its own profitability in Taiwan within five years of starting operations.

Parent company Cathay Financial Holdings confirms to AsianInvestor that it has entrusted its life insurance arm’s NT$220 billion ($12 billion) portfolio to Cathay Site for management – more than doubling its AUM to NT$360 billion as at the end of this year’s third quarter.

Cathay Life’s 40-strong domestic equity team had also been transferred, which the parent says means Cathay Site now has the largest investment team among Taiwanese fund houses.

“By integrating Cathay Life’s existing domestic equity investment team into Cathay Site and consolidating both companies’ resources and research coverage, Cathay Site’s investment capability and yields will be improved,” a spokesperson says.

Cathay Financial adds that it has further ambitions for its subsidiary fund house to expand into other asset classes as well as overseas markets at a later stage.

The parent completed its 100% acquisition of Cathay Site in June this year, after which it began to integrate the investment capabilities of its two subsidiaries.

The merger was announced last November, prior to which Cathay Site was 40% owned by Cathay Life and 3.75% by Cathay Venture Capital.

Separately, Jeff Chang, general manager of Cathay Site, expresses optimism that its joint venture with CDB Securities in Beijing will become profitable in 2013.

The venture, which was agreed on July 4, is expected to obtain an operating licence from the China Securities Regulatory Commission (CSRC) next year.

It will start with registered capital of Rmb200 million ($31.5 million) and be 66.7% invested by CDB Securities and 33.3% by Cathay Site.

Chang has pledged to shape the JV into a top-five fund management house in China with strong backing from its ambitious partner (see AsianInvestor magazine’s October 2011 issue).