Ping An AM partners QIC in search of more alternatives
The asset management arm of China’s second biggest insurer Ping An has partnered Queensland Investment Corporation, with a view to feeding mainland investors' growing appetite for foreign alternative assets. In turn, Brisbane-based QIC is eyeing China’s bond market.
The move comes as Shenzhen-based insurance firm Ping An, like its mainland peers, has been boosting its overseas and alternatives exposure in recent years.
And Chinese institutions in general are showing growing interest in Australian assets for diversification purposes, amid rising uncertainty over both the UK and US markets.
Australia's stability appeal
“We see more Chinese institutions coming to ask us about the Australian market,” Janet Li, director of investments for Greater China at Willis Towers Watson, told AsianInvestor. “Part of the reason is that most Chinese institutions have allocated in the US and UK, which are the first destinations for their foreign exposure.”
Australia is looking potentially more stable than those two markets, she noted. This shift in sentiment follows the shock events of Britain’s June 23 vote to leave the EU and Donald Trump being elected US president on November 8.
Industry sources agreed some institutions were looking for infrastructure deals such as utility investments. Mainland insurers such as Ping An Life and China Life have focused on dollar assets beyond their Hong Kong equities exposure.
Indeed, Morgan Stanley Infrastructure said Chinese insurers showed strong demand for its second global fund. Mainland investors' appetite was significantly higher for MSI’s second global strategy than the first. The latest fund closed in February at $3.6 billion and is targeting deals in Australia’s resources sector, among other assets.
Partnership ambitions
The aim of the Ping An Asset Management-QIC partnership is for the two firms “to explore opportunities to jointly design and distribute alternative investment solutions for Chinese institutional investors”, said a QIC spokesperson in an email.
A spokeswoman at Ping An AM declined to comment, except to say that both firms were working on the details, which would be announced in the coming months.
Ping An AM had Rmb2.16 trillion ($313 billion) under management as of September; as of the end of June, third-party assets accounted for just Rmb276 billion of those. It manages part of the insurance capital from its parent group, which has Rmb1.83 trillion of AUM, as well as third-party money and funds.
Chinese insurers’ appetite for overseas alternatives, has been driven by new risk capital charges in China and a desire for higher returns, but industry observers point to a potentially limited supply of assets.
Insurers are not alone in their moves into Australia.
Perhaps the most high-profile mainland allocator to the country this year has been China Investment Corporation (CIC). The sovereign wealth fund joined a consortium led by QIC – together with Australia’s Future Fund, US-based Global Infrastructure Partners and Canada-based Borealis Infrastructure – to acquire a 50-year lease for the Port of Melbourne for A$9.7 billion ($7.3 billion) in September.
CIC also joined a co-investment deal worth A$9.1 billion to buy Australia’s largest ports and rail operator, Asciano, in March. Before that, the fund paid A$2.45 billion in October last year to acquire Sydney-based Investa’s property portfolios from Morgan Stanley.
QIC eyes China clients, bonds
Meanwhile, QIC – which runs $58 billion across real estate, infrastructure, liquid strategies, private equity and multi-asset – is closely watching the development of China’s $8.7 trillion bond market and expects to participate as liquidity steadily improves.
Moreover, the firm is looking to diversify and expand its client base in new infrastructure markets, including China, said QIC chief executive Damien Frawley last December. It closed a global infrastructure fund at A$1 billion in August last year, securing investments from Asia investors, including a leading mainland insurer, according to its annual report.