CPIC plots buildout of new offshore investment arm
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Having re-established an offshore investment arm last year, China Pacific Insurance (CPIC) aims to double the number of staff there to 25 within three years to help build up its overseas asset portfolio and, eventually, manage money for third-party clients.
China’s third biggest insurer has, like its larger peer Ping An, been staffing its new Hong Kong operation with international expertise (see box, Building the team). Half of CPIC Investment Management's headcount of 12 are investment staff, and it aims to add four more executives this year, including another two investment professionals.
The insurer also hopes to raise more funds for the new unit to manage by completing a secondary listing in London in 2020, 'CG' Zhou Chenggang, chief executive of CPIC IM, told AsianInvestor in an exclusive interview.
“By the end of the year we're looking to have several billions of Hong Kong dollars under management,” he said. “There is now a lot of uncertainty due to the coronavirus pandemic, but the funds will be transferred [from CPIC] to CPIC IM in [the next] two years."
By 2025 CPIC IM should be managing between HK$15 billion ($1.93 billion) and HK$20 billion for the group, said Zhou. That will still constitute a small percentage of CPIC’s assets under management, which stood at Rmb1.42 trillion ($201.2 billion) as of end-2019 and does not include money the group manages for other institutions.
The asset manager is now in discussion with the life insurance and property-and-casualty insurance units on how much will be transferred to the Hong Kong unit, Zhou said. Ultimately, CPIC IM will execute the group’s overseas allocation strategy.
Zhou conceded that CPIC had been lagging behind peers such as China Life and Ping An in not having an overseas asset management unit. CPIC had in fact set up an offshore investment arm in 2010, he added, but closed it in 2013 as it did not at that point have a big appetite for offshore assets.
The situation is different now. While CPIC IM plans to start a third-party business, most of the AUM will initially come from its Shanghai-based parent insurer. The asset manager needs to build an investment track record before it will be able to attract institutional money, Zhou added.
CPIC has less than 1% of its assets invested overseas and is keen to increase that figure. “I hope our offshore allocation will go up, for diversification purposes,” Benjamin Deng, the insurer’s chief investment officer, told AsianInvestor in February.
Signalling such intentions, the insurer issued its first global multi-asset mandate late last year, for $500 million spread across five fund houses.
LONDON CALLING
More money is also set to flow in from CPIC’s planned secondary listing on the London Stock Exchange, which Zhou hopes to be completed in 2020. He sees that as feasible, if the outbreak is under control and the stock market appears supportive.
He expects CPIC to raise $2 billion to $2.5 billion in global depository receipts (GDRs). Most of the funds raised will be managed by CPIC IM, though it may also employ external managers to manage part of it, Zhou said.
"If the GDRs are issued, our AUM will immediately become much larger,” he added, which means the bench of investment talent will need to be bigger too.
The London secondary listing plan, as announced in September 2019, was originally scheduled for early this year, Zhou said but was postponed due to the coronavirus outbreak.
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BUILDING THE TEAM CPIC Investment Management secured its Hong Kong regulatory licence in July last year and now has 12 employees, half of which are investment staff, and aims to increase the total to 16 by the end of this year and to 25 in three years’ time, said chief executive CG Zhou. The firm hired the whole team in Hong Kong from other firms, mostly international ones, and did not relocate anyone from CPIC headquarters in Shanghai, Zhou said, adding that this was relatively unusual among its peers. While the current environment is challenging for asset managers, Zhou acknowledged, it could be positive for a firm starting to build out its business. For one thing, there is a larger pool of financial talent to choose from after recent layoffs by fund houses and sell-side firms. What’s more, from an investment perspective, many stocks and bonds are undervalued after the coronavirus-sparked market drop, he said. Several members of the team came on board late last year, and the firm plans to add two more investment staff in 2020 but does not intend to hire a chief investment officer across the multiple asset classes, Zhou said. Alice Mao joined as head of fixed income at CPIC IM in November from Hong Kong-based CSOP Asset Management, where she was deputy head of financial institutions. Portfolio managers Kerry Zhang and Zhang Jiaying are now sharing her former duties, a spokesman at CSOP told AsianInvestor. Prior to CSOP, Mao was a fixed income portfolio manager at the Singapore office of the Investment Company of the People’s Republic of China, a subsidiary of China’s central bank that helps to manage its foreign exchange reserves. Alan Zhong also joined in November, as head of equities. He had previously worked at Dongxing Securities (Hong Kong) Asset Management, Harvest Global Investments and HSBC Global Asset Management. Zhou himself had joined CPIC IM in August 2018 and was previously Hong Kong-based head of renminbi sales at Standard Chartered. Before that, he was head of China business development at Pimco, a position he left in 2014. |