A new asset management joint venture (JV) formed
in Hong Kong has brought together two of the world’s largest
financial institutions, China Life and US asset management company
Franklin Templeton Investments.
The JV, China Life Franklin Asset Management
(CLFAM), will initially manage China Life Group’s non-renminbi
foreign assets. The long-term objective is to also provide
investment management and advisory services to other Chinese
institutional investors, said Franklin Templeton.
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China Life’s asset management unit controls 50 percent of CLFAM, a
China Life affiliate called China Life Insurance (Overseas) Company
has a 24 percent stake and Franklin Templeton Strategic Investments
controls the remaining 26 percent.
The establishment of CLFAM has been made feasible by relaxation of
restrictions on foreign investment, said Franklin Templeton. The
process of liberalisation began in 2005 when insurers were for the
first time permitted to undertake limited offshore invest. A far
more significant move came in July this year when the China
Insurance Regulatory Commission and China’s reserve bank raised
Chinese insurers’ overseas investment ceiling from 5 percent of
their assets to 15 percent.
Based on the insurance industry’s total assets, this made it
possible for a total of about $50 billion to be invested offshore
by insurers.
As of the end of 2006, China Life’s asset management unit had total
assets under management of more than RMB750 billion ($100 billion).
Franklin Templeton reported total assets under management of $601
billion as at 30 April 2007. Franklin Templeton, which has had a
presence in China for two decades, also holds a 49 percent stake in
Franklin Templeton Sealand Fund Management, which currently manages
$2 billion in China’s domestic equity market.
