July 18, 2017 12:20 am JST

Ping An's Lufax to offer offshore wealth management

Singapore platform to target region's middle-class retail investors

JOYCE HO, Nikkei staff writer

Lufax launches overseas operations in Singapore on July 17. (Photo by Mayuko Tani)

SINGAPORE -- China's leading integrated financial services provider Ping An Insurance Group said Monday its affiliate Lufax Holdings will start providing wealth management services from Singapore for middle-class retail investors.

Having acquired "in-principle" approval in the form of a Capital Markets Services license from the Monetary Authority of Singapore, Lu International -- Lufax's Singaporean arm established in January -- will not initially be able to serve Singaporean residents.

"It would require a lot more time and more restrictions on the product side," said Gregory Gibb, Lufax's chief executive, explaining why the company opted for a license that only allows Lu International to serve overseas investors.

Mainland Chinese stashing assets offshore will definitely be "the target market," according to Gibb. "For people that have their money in China, there is capital control, they have to figure that out for themselves," said Gibb.

He estimated that "several millions" of mainland Chinese already hold accounts overseas in jurisdictions such as Hong Kong, Singapore and the U.S.

"The other Southeast Asian markets are interesting," he added. "The ones that have large populations, that have those middle classes in formation."

Gibb said the initial objective of the platform would be to "give customers an opportunity in U.S. dollars to safely and consistently earn a 4% return." He added that the company was not looking to compete with private banks, and was targeting a customer base that generally invests between $20,000 and $1 million and is looking to invest globally.

About three to four products will be offered when the Lu International platform goes online, ranging from money market funds, equity-linked exchange-traded funds, real estate investment trusts, and fixed income instruments with six to 12 months' duration.

Automated "robo-advising" and infrastructure investments prompted by China's Belt and Road Initiative might come later, according to Gibb.

Established in 2011, Lufax -- short for Shanghai Lujiazui International Financial Asset Exchange -- was originally a peer-to-peer lending platform, with just one product during its first 18 months. But peer-to-peer lending now accounts for just 10% of the group's monthly trading volume, according to Gibb, who noted that tighter regulations for peer-to-peer lenders in mainland China had so far affected 7% of Lufax's business.

It now claims to be the largest online wealth management platform in China, with over 31 million registered users and 3,000 products worth a total of $60 billion in terms of assets as of December 2016.

Lufax is preparing for an initial public offering -- Gibb did not specify where but hinted that the company has "done a lot of homework for Hong Kong," despite the city's lack of tech listings and of a sophisticated investment ecosystem for tech companies.

He said Lufax would not conduct another fundraising round before the potential flotation. It was last valued at $18.5 billion after closing its Series B financing of $1.2 billion in January 2016.

Asia300

Ping An Insurance (Group) Co. of China Ltd.

China

Market(Ticker): HKG(2318)
Sector:
Industry:
Finance
Multi-Line Insurance
Market cap(USD): 139,256.38M
Shares: 18,280.24M

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