UBS Asset Management is expected to follow.
Fidelity said that its Shanghai-based unit has obtained a private fund management license in China on January 3, according to a Fidelity spokeswoman.
This marks the first time a global asset manager is registered as a private fund management company in China, according to a statement from the firm.
Under the licence, asset managers are required to launch a product within six months after registration. If not, their private securities fund licence will be suspended, Aries Tung, head of strategy and business development for China at UBS Asset Management, said in a previous interview with our sister publication Fund Selector Asia.
“[The fund managers] are not rushing to apply for the license unless they are very confident that the investment platform and the people are ready,” he said.
A Fidelity spokespersan said the firm aims to launch its first onshore product within six months, but did not elaborate on the kind of products because it is evaluating a number of options. Fidelity will target both high-net-worth individuals and institutional investors, she added.
Registering as a private securities fund manager through the Asset Management Association of China (AMAC) is a functional step before a firm can launch onshore equity and fixed income-focused onshore products to investors. It would take 20 days to get approval from the AMAC, according to the association’s online FAQ.
The firm did not provide the application date for the license through the AMAC, but said the registration was a smooth process.
Fidelity first established its foreign-owned enterprise, FIL Investment Management (Shanghai) Company, in 2015.
It has been operating in China since 2004, offering offshore capabilities to domestic institutional clients and retail investors through partnering with banks under the qualified domestic institutional investor (QDII) programme, Mark Talbot, managing director for Asia-Pacific, said in the statement.
“This latest development expands our capabilities to support Chinese clients’ needs to invest both onshore and offshore,” he said.
The firm has representative offices in Shanghai and Beijing, as well as an operating center in Dalian, employing around 400 staff in China, according to the statement. It has a quota of $1.2bn (€1.15bn, £0.97bn) under the qualified foreign institutional investors (QFII) scheme, which allows Fidelity to invest in Chinese capital markets.
UBS to follow
Like Fidelity, UBS Asset Management plans to launch onshore products in the second half through its wholly foreign-owned enterprise (WFOE) licence, according to Tung.
It now has two WFOEs, one in Beijing, which was set up in 2011 and acts as a private fund manager for real estate, private equity and infrastructure investment; and the other in Shanghai, which was granted the Qualified Domestic Limited Partner (QDLP) license in March 2015, with $100m quota for non-retail investors to buy offshore products.
What the firm is doing now is converting the QDLP company into one that comprises both QDLP and an investment management businesses, Tung said.
The QDLP programme allows firms to raise renminbi from wealthy and institutional investors to invest overseas.
As of December, nine companies have applied for foreign licences, and that number is expected to double shortly, according to Shanghai-based consultant Z-Ben Advisors. Allianz Global Investors, Neuberger Berman, Vanguard and Mirae Asset Management were among the latest to set up an IM WFOE.
Other asset managers that have obtained similar licences include Aberdeen Asset Management, Bridgewater Associates and JP Morgan Asset Management.
Echoing Z-Ben, Sandra Lu, partner of Llinks Law Offices, said last month during the Hong Kong Investment Funds Association Annual Conference that in the past six months, AMAC saw some 20 foreign fund houses show interest in setting up an their own Chinese venture.
