UBP shuns JVs, WFOEs for new China business

Union Bancaire Privée (UBP) has shunned the usual approaches to operating an asset management business in China with its latest move.

Rather than setting up a joint venture or wholly foreign-owned enterprise (WFOE), the Swiss private bank has established a Shanghai-based firm as a partnership with staff it has hired.

UBP Investment Management (Shanghai) opened for business this month and will target institutional investors and ultra-high-net-worth individuals.

The partnership gives the firm a more flexible setup, said Lawrence Lo, Asia chief executive of UBP’s asset management arm, and Ted Holland, Asia head of business development, without elaborating.

Lo told AsianInvestor: “Whenever we want to establish an operation in a foreign market we want to go into partnership with a local player. As a result, a WFOE wouldn’t have made much sense.”

Yet the WFOE approach appears to be gaining favour at the expense of the JV model. BNP Paribas Investment Partners set up a WFOE in December, while BNY Mellon and State Street Global Advisors sold the stakes in their mainland JVs last year.

UBP's Chinese operation will be headed by Chen Hong as chief investment officer of an eight-strong team comprising three equity analysts, one trader and four IT and administrative staff. Chen was most recently CIO of Chinese firm HFT Investment Management. Lo would not be drawn on future expansion plans.

The new firm will look to develop Chinese equity and fixed-income investment solutions.

Lo said opening the mainland office was part of UBP's longer-term strategy to expand its global presence. It joins the firm's four other operations in Asia – in Hong Kong, Singapore, Taiwan and Tokyo.

Asked about the challenges UBP faces in establishing a Chinese business, Lo said it was about retaining the ability to remain flexible while also having the right platform to capitalise on the liberalisation of the mainland's capital markets.

Having set up its Asia business in February 2011, UBP made significant moves to expand in the region last year. It set up a multi-family office platform last May and moved into new offices in Hong Kong in July.

The Geneva-based firm employs around 1,350 people and had SFr95 billion ($107 billion) in assets under management as of June 30, 2014.