The Proportion Of Foreign Shareholding Fund Companies Is Liberalized. Joint Venture Raises The Stake Change.

The pace of financial opening has been increasing rapidly.

Recently, the securities and Futures Commission spokesman Gao Li announced that the securities and Futures Commission explicitly abolished the restrictions on foreign capital shares of securities companies and fund management companies. Since April 1, 2020, the ratio of foreign capital shares of fund management companies has been abolished nationwide.

The setting of the timetable means that after nearly half a year, the wholly foreign-owned public offering will be formally opened, and the industry structure with the majority holding of domestic holding holding for 22 years will usher in a change.

The industry expects that once the proportion of foreign shareholding fund companies is officially opened, shareholders of joint venture will actively seek control.

The emergence of foreign holding fund companies will inevitably impact domestic public offering industry.

Joint venture raises stock interest changes

Driven by the policy of opening to the outside world, the pace of China's entry into the foreign investment market has been growing faster and faster in the past two years.

In June this year, the securities and Futures Commission approved the application of the Morgan Stanley Huaxin stock change, which became the first fund holding company with relatively foreign capital holdings.

In August of the same year, Morgan chase Morgan's capital management successfully bid for the 2% stake in Morgan fund. At this point, Morgan will hold 51% stake in Morgan, becoming the absolute controlling shareholder of the company. This is also the first fund company in China's public fund industry to be wholly held by foreign capital.

In addition to Da Mo Hua Xin and Shang Morgan, according to the twenty-first Century economic report reporter, some foreign joint venture fund companies also have the right to seek control of foreign shareholders.

Among them, a fund company executives with a foreign shareholding ratio of 49% told reporters that the foreign shareholders of their company were planning the matter recently, but there is no definite number yet.

The executives said, "since the establishment of our company, the Chinese and foreign shareholders have always maintained communication, and the company's shareholding structure has been stable, enabling the company to achieve steady development. At present, our foreign shareholders hope to win more shareholdings, as well as positive changes in the foreign policy of the fund industry. "

Some analysts pointed out that the proportion of Chinese and foreign shareholding is 49% of the public offering, and foreign shareholders may indeed be more active in seeking the controlling rights of fund companies. In addition, small and medium-sized joint venture public offerings, as well as joint ventures raised by foreign investment general managers, may also be more interested in seeking foreign ownership.

According to the latest statistics of the fund industry association, as of the end of August 2019, there were 126 fund management companies in China, including 44 Sino foreign joint ventures and 82 domestic funded companies.

Sino foreign joint venture fund companies, INVESCO the Great Wall, Peng Hua, Haifeng Tong, HSBC Jinxin, UBS and other 10 companies of foreign ownership ratio of 49%.

In addition to the existing joint venture fund companies, another wave of foreign holding fund companies that may be born in the future mainly come from overseas information management giants who have obtained the qualification of WFOE PFM (wholly foreign owned private equity investment fund managers) in China.

In April 17th of this year, Black Rock announced that the appointment of Tang Xiaodong as head of China will take effect from July 2019. Tang Xiaodong once served as general manager of China Huaxia Fund and vice general manager of GF Securities. In the view of the industry, Tang Xiaodong's move to a large extent is to prepare for the impact of public license, which is also the common goal of foreign capital management agencies to enter China.

Since the beginning of last year, BlackRock, pilotage and UBS management have made clear that they want to get a full public offering licence. Once the foreign capital shares are officially abolished, the foreign giants will surely accelerate the march towards the public offering.

A senior public offering official in Southern China told reporters that "overseas information management giants have long coveted the mainland public offering licenses. But before the policy is released, we can only take a curve path, apply for a private licence first, and apply for a public offering license when the time is ripe. Now the time is near, and more and more foreign institutions will take action. At present, some large foreign private placement companies are already adjusting the internal structure of the company, in order to strive to become the first batch of foreign capital recruitment next year.

No fear of "wolf coming".

With the accelerated pace of China's entry into the foreign investment market, what kind of impact will foreign investment bring will become one of the topics with high level of discussion in the industry.

From the reporter's interview, the domestic fund raising fund company has a rather low attitude towards the foreign holding public offering, and is confident that it can face the competition.

A senior executive of a public fund company in Southern China told reporters that "since 2002, the first Sino foreign joint venture fund company, Guo Lian an, has been allowed to make preparations, so far, foreign capital has entered the Chinese fund industry for 17 years. In the past 20 years of development of China's fund industry, we have fully realized that competition is inevitable and will become more and more intense.

From the perspective of a number of respondents, respondents believe that there may be advantages in the following aspects: first, there are inherent advantages in cross-border business expansion and cross-border asset allocation; second, it has more advantages in index investment, derivatives pricing and trading capabilities; third, the long-term investment philosophy and mature investment framework of foreign public offering may have some advantages in attracting institutional customers.

However, some respondents believe that the foreign holding public offering is also facing the challenge of adapting to the Chinese market.

The general manager of a public fund company in Southern China analyzed, "although foreign investment has a mature investment concept, it may also face the pain of unwillingness to accept it in a certain period after its establishment. At the same time, as a latecomer, there is no advantage in foreign capital raising in terms of channel layout. "

The foregoing general manager mentioned that "although the restrictions on the proportion of foreign shareholding fund companies will be abolished from the policy perspective, this does not mean that the regulatory standards adopted by foreign holding public offerings and domestic holding public offerings are unified, and that foreign investment may be restricted by their status in the course of carrying out certain businesses in the future. For example, some institutions outside the business, in terms of access threshold may exclude foreign public offerings. Or, when applying for the same business, the approval process for foreign capital raising will be longer.

Of course, no matter what kind of development the foreign holding public offering will show, the general trend is irresistible. For the domestic fund industry, the entry of foreign investment will play a positive role in promoting healthy competition in the industry.