China Life aims high with AMP joint venture
China Life, the nation's largest insurer, aims to grow a new joint venture into a "significant market participant" on the back of its extensive distribution network, its partner says, becoming the first insurer to offer mutual fund products on the mainland.
The top insurer has teamed up with Australia's top fund house, AMP Capital, to form joint venture fund house China Life AMP Asset Management, AMP said in a press release issued yesterday. The two parties will invest a total of 588 million yuan (HK$738.6 million) to form the new firm, with AMP Capital contributing A$15 million (HK$104 million) for a 15 per cent stake.
It is the first time a Chinese insurer has set up a mutual fund house on mainland, following regulatory changes that took effect in June allowing brokers and insurers to sell mutual funds to the public.
"It's an exciting time," Anthony Fasso, international head of AMP Capital's global clients division, said from Melbourne yesterday. "This platform will allow us to do a couple of things: manage money for local people in the local market, take international capital and have it invested through this platform, and thirdly, take China's money and invest overseas.
"In the early years of business, we want to have a range of products, including bond products, equity products and balanced products. In the future, we would also want some international QDII (qualified domestic institutional investor) products."
The mainland's mutual fund industry is already fiercely competitive. According to Shanghai-based research firm Z-Ben Advisors, 60 independent fund managers offer nearly 800 individual products on the mainland.
Meanwhile, the industry is suffering from long-term redemption pressure due to a loss of investor confidence in the domestic market. The market has been one of the world's worst performers for the past three years.
"This is a competitive market … China Life has a wide network of life agents around mainland China cities, so that gives us a very competitive advantage," Fasso said. According to China Life's annual report, the insurer had 693,000 life agents at the end of last year.
"In terms of priority, our products will target retail investors initially and, secondly, institutional investors," Fasso said.
When asked why China Life needed to bring in a foreign partner, Fasso highlighted "international practice, corporate governance, product development process, risk-management structure" as the things the Chinese insurer most needed when entering the mutual fund business.
China Life's joint venture has received regulatory approval from the China Insurance Regulatory Commission and must be approved by the China Securities Regulatory Commission, according to the press release.