Ping An targets offshore clients in big HK buildout

Ping An, China’s second-biggest insurer, is looking to build its international asset exposure and grow the client base of its asset management arm outside its domestic market after hugely expanding its investment capabilities in Hong Kong. 

Ping An Asset Management HK has hired several experienced executives in the past 18 months (see box below) – including a chief investment officer plus heads of fixed income, private equity and real estate – and is now moving to add in sales and marketing. The firm may also consider offices outside Asia in the future. 

"We’ve reached a point where the investment teams are ready and we need to ramp up the business,” Tung Hoi, co-chief investment officer of Ping An Insurance and chairman and chief executive of the group's overseas insurance business, told AsianInvestor this week.

To that end the firm is now working on building up its marketing and sales resources in Hong Kong, Tung said, with most of its hiring in the city "now complete". 

Tung Hoi, Ping An

Tung said he was asked in September 2016 to build the firm’s international investment capabilities in Hong Kong: “I was mandated to bring together the resources of the group’s investment subsidiaries and implement a more centralised and coordinated approach to investing outside China.” 

Tung spent time between Hong Kong and Shanghai in the first half of 2017 and transferred to Hong Kong in July with his family.

The number of individuals at Ping An AM HK with licences from Hong Kong’s Securities and Futures Commission (SFC) has more than doubled to 21, up from nine at the end of 2016. Of those, at least three have joined the firm since February this year.

Ping An’s bold move reflects the burgeoning international ambitions of Chinese insurers and fund houses generally. It is, nonetheless, fitting perhaps that arguably the country’s most pioneering insurer in respect of foreign markets, is taking such a step.

GROWING AMBITIONS

The new Hong Kong team will largely manage money for the in-house insurance business but the firm aims to branch out and manage third-party money too, Tung said. 

That includes running mandates for other institutions but also funds that the firm will distribute in China through banks, multi-family offices and other intermediaries, he added. "We wouldn't need such a big team otherwise."

The firm will also look to apply for the appropriate licences to sell international products onshore through channels in China.

At present the asset manager uses its relationships with firms that have qualified domestic institutional investor (QDII) licences or that use Stock Connect to distribute its Hong Kong equity products.

“We are mainly aiming to manage Chinese capital in Hong Kong – that’s the design of this business model,” Tung said.

Developed market investors are less likely to use Ping An AM for investing into developed markets, he noted. The firm is not expected to pitch for US equity mandates, for example. 

However, give it a few years and the firm may well seek to attract investment capital from OECD countries into China, Tung said. “Ping An will ultimately look to capture the opportunities from the two-way flow of capital."

And once Ping An AM has expanded its offshore business, it might think about opening offices in locations such as London or New York, he said. 

HIRING BIG HITTERS   The calibre and experience level of Ping An Asset Management's recent hires in Hong Kong reflect its big ambitions. Sean Chang, Ping An AM HK’s new head of fixed income, is one of the most recent arrivals. His SFC licence started with Ping An on February 23 and he became a responsible officer there on April 16. Until January he was head of Asia debt at fund house Barings, a role he took on in 2012. Before that, he spent five years as investment director at HSBC Global Asset Management (at the time Halbis Capital Management), also covering bond markets. Barings declined to comment on Chang’s departure. Other senior arrivals include Wong Chak-Kei, who started in August as head of financial products, focusing on building and running the structured products capability. His SFC licence started in November and he became a responsible officer in late April. Wong had previously served as Asia head of sovereign and financial institutions at French bank Societe Generale since December 2013, according to his LinkedIn page.  Maverick Wong, Ping An Maverick Wong started as head of private equity in August, having previously worked as head of Asia private equity at Singapore sovereign wealth fund GIC. The latter institution did not respond to an emailed request for comment. In addition, Justina Fan joined Ping An AM HK in July, as head of real estate, from property services firm Cushman & Wakefield, where she was head of outbound investment for Greater China. Cushman did not respond to a request for comment.   Also in July, Chai Chi-Kit (known as 'CK') joined as head of capital markets. He had previously worked at Texas Teachers Retirement System for 21 years, most recently as a senior managing director in Hong Kong, according to his LinkedIn page. Chai is focused on leveraging quantitative analytics to revamp Ping An’s equity investment processes and methodologies, said Tung Hoi, co-chief investment officer of Ping An Insurance and chairman and chief executive of the overseas insurance business. The main focus for listed markets now is on using passive investments such as exchange-traded funds and factor-based strategies, he added. Head of infrastructure Dennis Chan and head of private credit Bruce Fan were in place before the buildout over the past year.

PRIVATE AND FOREIGN MARKETS

When Tung first moved to Hong Kong, he said Ping An AM had little money invested outside of China, largely only allocations to listed equities in Hong Kong. “Since then, we’ve massively expanded our spectrum of investment activities, mainly on the private side.”

Ping An does most of its private market investments via third-party funds, Tung added, but is looking to do more co-investment by sourcing deals from the asset managers it works with.

Less than 5% of Ping An’s insurance capital is invested in foreign investments, but the firm has been slowly building its overseas exposure, and that will continue with the new capabilities in place.

The current offshore investment limit for Chinese insurers is 15% of their AUM, but that is expected to rise in the future.

Mainland insurers, including China Life and Ping An, have been steadily building their overseas exposure in recent years. But they have been more cautious in doing so in the past year or two for various reasons. These include Beijing's tighter controls on capital flows offshore and its crackdown on the overly aggressive and acquisitive strategy of insurance firms such as Anbang, which collapsed earlier this year.