China’s Noah sets up Jersey managed trust for HNW investors

Added 17th August 2016

The Shanghai-based wealth manager Noah Holdings has set up a trust with international service provider JTC in Jersey to address the increasing succession planning needs of its high net worth clients in China.

China’s Noah sets up Jersey managed trust for HNW investors

Kenny Lam, group president of Noah Holdings

Noah’s partnership with JTC established ARK Trust, which is the first managed trust company in Jersey for a mainland China institution, according to JTC.

The driver for setting up the offshore trust was the changing needs of Chinese high net worth clients, which have accelerated over the past 18 months, said Kenny Lam, group president of Noah Holdings, speaking at a media event in Hong Kong on Wednesday.

“One year ago, the Chinese high net worth client would want to go global to diversify risk but also looked at [high] returns. The asset class choice was narrow – property and private equity.

“Today, the Chinese investor would say yes, he wants to diversify more and two, global investments are exactly that and I shouldn’t expect 15-20% return, I should be assimilating into the global environment,” he said.

Succession plans

Another point Lam emphasised was that Chinese clients are not just looking at investment opportunities but ways to plan for succession as the first generation of entrepreneurs ages and passes money to the younger family members.

"One – two years ago, clients wouldn’t speak about succession planning. Now they look at insurance, tax planning and most everything about second generation wealth planning"

“One to two years ago, clients wouldn’t speak about succession planning. Now they look at insurance, tax planning and most everything about second generation wealth planning.

“We are just at the beginning of this change and it will have many years of demand as [client needs] rapidly evolve.”

Investment arm

The firm, which has an asset management arm called Gopher, also said it set up an investment office in Silicon Valley last month and it has obtained a license for US investment.

“Our core client base is still Chinese high net worth individuals but we need a US team to look into the US market in a robust manner, both primary and secondary markets like hedge funds, to find the best investment opportunities for our clients,” Lam said. Previously, the firm had been looking at the US market from Hong Kong.

Shanghai-based Noah was listed on the NYSE in 2010. Noah and another Shanghai-based firm, Jupai Holdings, are the only two China-based wealth managers that have listed overseas.

As of 30 June 2016, Noah reported it had 114,870 registered clients, up 40.2% increase from 30 June 2015. The aggregate value of wealth management products distributed by the company during the second quarter of 2016 was RMB27.7 bn ($4.2 bn), a 2.0% decrease from the corresponding period in 2015, and an 11.8% increase from the first quarter of 2016.

Noah's total assets under management as of June 30, 2016 was RMB101.2bn ($15.2 bn), a 57% increase from 30 June 2015 and a 6.9% increase from 31 March 2016.

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