Five years ago, Manulife formed a distribution tie-up with the Agricultural Bank of China (ABC), hoping it would help it tap the individual retirement savings market in China.
The Canadian life insurer has spent more than a year looking for a partner to form an offshore pension partnership.
The firm has been in talks with banks, including ABC, but regulatory question marks remain. “There is a lot of uncertainty about how it is in China. [the regulations on foreign JVs] Michael Dommermuth, former president of Manulife Investment Management, stepped down in 2017 to become current president of Global Asset Management.
Establishing such a company and obtaining the necessary regulatory approvals would allow Manulife to directly participate in the enterprise and annuity market, Dommermuth said. It also offers other retirement solutions.
At that time, Manulife had a life insurance and asset management JV in China – Manulife-Sinochem Life and Manulife TEDA Fund Management respectively. And he saw the pension as another logical step, especially as reforms to the country’s public pension fund came together.
In the year In November 2017, the life insurer announced the establishment of a wholly foreign-owned enterprise (WFOE) Manulife Overseas Investment Fund Management (Shanghai).
After China approved the launch of a pension target fund in mutual funds in 2018, Manulife TEDA was one of the managers of the Fund of Funds Target Fund (FOF).
In the year Fast forward to November 21, 2022 and the company announced that it has received regulatory approval to acquire 51% shares in Manulife TEDA Fund Management from its JV partner, bringing its ownership stake to 100%.
“We are pleased to have the opportunity to continue providing professional products and services to both institutional and individual investors in China, supporting the development and growth of China’s pension system, and helping Chinese people meet their growing retirement planning needs,” he said. Lorentz, president and CEO, global wealth and asset management at Manulife Investment Management.
“This is a huge milestone for us because it means we have direct access to China’s large and fast-growing retail fund market,” said Dommermuth, now head of Asia wealth and asset management at Manulife Investment Management.
Two weeks later on December 9, Fidelity International announced that a wholly foreign-owned enterprise (WFOE), FIL Fund Management (China) Company, had been granted regulatory approval to establish a wholly-owned offshore mutual fund business in China. It enables it to offer offshore investment and retirement solutions to retail and institutional clients across the country.
Mutual funds are one of the main investment vehicles in China’s newly established private pension system, or the third pillar of the country’s pension system.
Also read: The battle is on: Fierce competition is expected as China’s regulators set the stage for private pension plans
With recent regulatory approvals, both Manulife and Fidelity will join BlackRock as China’s first wholly foreign mutual fund manager in 2021, with direct access to the country’s trillion-dollar private pension business.
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