“The significance of the investment company WFOE is that it offers Manulife an opportunity to serve a broader investor base with a wider solutions scope on the ground,” said Michael Dommermuth, Manulife Asia’s head of wealth and asset management.
Existing investment company WFOE license holders are from industries outside of the financial and asset management sectors, the firm said.
According to Z-Ben Advisors, a consultant, Manulife WFOE’s business scope includes investment in sectors approved by the government for foreign firms; providing advisory services for investors; providing investment advisory on market intelligence and investment policy advisory services for related or affiliated companies.
Manulife aims to “gradually introduce to Chinese institutional investors our range of global product offerings, which include the traditional products and our private assets strategies, such as timberland, farmland, commercial real estate, etc”, Dommermuth continued.
He said Manulife manages private assets for the firm’s own funds as well as external clients.
The firm also expects to serve a broader investor base such as small and medium-sized institutions, private banks and independent wealth management platforms.
China partnerships
Manulife already has two partnerships in onshore China: Manulife TEDA Fund Management, in which it holds a 49% stake, and Shanghai-based Manulife-Sinochem Life Insurance, where Manulife owns 51% and is allowed to sell mutual funds in the mainland.
The firm said the new entity can complement its existing joint ventures in serving investors in China.
Z-Ben says this new type of WFOE allows more flexbility for managers “to seamlessly pursue multiple investment business lines onshore”.
By comparison, Fidelity has an investment management WFOE that allows the firm to obtain a private securities fund license to launch products that invest in onshore securities markets, including equities, fixed income, futures and asset-backed securities.
However, Manulife’s WFOE has a bigger investment scope, which includes private real assets. A Manulife spokeswoman noted the firm still needs to obtain the necessary licenses to roll out different solutions.
Another type of WFOE, the Qualified Domestic Limited Partner (QDLP) version, allows fundraising to buy offshore products only. UBS said in an earlier interview that it plans to merge its different WFOE entities into one platform.
Z-Ben said it expects other asset managers, such as Blackrock, JP Morgan and Fidelity, will also apply for the WFOE model that Manulife has.
