International asset managers Azimut Group, Hamilton Lane and Pimco plan to accelerate their expansion into China’s 122 trillion yuan (US$18 trillion) wealth management industry, as Beijing gives the go-ahead to more foreign players. Azimut, which is Italy’s largest independent asset manager and is based in Milan, will in the next few months launch its eighth private fund under China’s Qualified Domestic Limited Partner (QDLP) initiative, Stefano Chao, the general manager and CIO of AZ Investment Management, an indirectly and wholly-owned unit, told the Post . The QDLP initiative allows foreign asset managers to raise funds from investors in China and invest overseas, and AZ will help investors invest in high-yield bonds in developed markets. “If you are a global asset manager, you cannot not be in China,” Chao said. “There are many upside opportunities, as the market is very big and there are a lot of opportunities for growth.” The planned expansion by these international asset managers comes as global firms increase their presence in the world’s second-largest asset management market. Moreover, China’s asset management industry is expected to jump to 210 trillion yuan in 2025 from 122 trillion yuan at the end of 2020 , after a 10 per cent surge from 2019, according to a report co-authored by China Everbright Bank and Boston Consulting Group. Asset manager Toscafund to open Hong Kong office in Asian wealth push Beijing allows foreign asset managers to establish funds in China and engage in cross-border investment programmes including QDLP, and sister programmes the Qualified Foreign Limited Partner (QFLP) initiative, which allows licensed international funds to invest in China’s private equity and venture capital markets, and the Qualified Foreign Institutional Investor (QFII) initiative, which allows licensed foreign investors to invest in China’s stock markets in Shanghai and Shenzhen. Nine cities have now established pilot QDLP programmes, compared with just Shanghai in 2012. As of May 31 last year, 36 foreign asset managers had registered under QDLP programmes, compared with 14 in 2018, according to Everbright Securities. Beijing to boost Macau diversification into financial services with new scheme Chao did not disclose the total assets managed by AZ in China, or the quota for its upcoming QDLP fund citing regulatory requirements. “We expect to use up all the quota that was given to us” for the upcoming fund, he said. The asset manager will expand its product offerings beyond the equity long-only private funds that it currently offers in China. It plans to expand its portfolio by increasing advisory services for large institutions such as banks, Chao said, after receiving its advisory licence from the government last year. AZ became the first wholly foreign-owned enterprise private securities investment fund manager, or WFOE PFM, to be allowed to launch funds under the QDLP by the Shanghai government on May 5. Shanghai opens private markets to investors to rival Hong Kong for funds The city said four asset firms, the local unit of Hamilton Lane, CCB International Asset Management, Beijing-based CDH Investments and JAFCO Asia, had applied for licences under the QFLP initiative. Pimco, meanwhile, expanded its quota under QDLP by US$200 million, while a few others were granted quota increases under QDLP or QFLP. Hamilton Lane and Pimco both confirmed to the Post that they would launch more funds and services tailored for Chinese clients, and international clients interested in investing in China. Hamilton Lane will start to register its onshore management company and QFLP fund, which will be invested in the private-equity secondary market, Mingchen Xia, co-head of Asia Investments at the company, told the Post . The US-based private markets investment company managed and supervised US$851.8 billion in assets globally as of December 31, 2021. China scraps foreign quota to allow unfettered access to stock market “Our QFLP fund will be focused on private-equity secondary opportunities, including [limited partner] stake purchases and [general partner]-led transactions. We will leverage our extensive general partner relationships and experience in China, and make investments in domestic consumption and technology innovation-driven sectors.” China is strategically important for Pimco both from portfolio management and business perspectives, the firm said in an emailed reply. “We take a secular perspective and continue to see an onshore asset management industry and regulatory landscape that continues to offer greater opportunity and access for global firms like Pimco,” it added. “We are currently considering multiple opportunities and next steps in China, including exploring local for local strategies,” Pimco said. The California-based investment firm, which is owned by insurance giant Allianz, has US$2 trillion in assets under management with a focus on fixed income. KKR Investment Management became the first United States private-equity fund to receive a private fund management licence in mainland China, state media Securities Times said last week. The licence allows foreign funds to raise proceeds from domestic investors, such as institutional and high net worth investors, to invest in mainly domestic assets.