Chinese Internet giant Tencent has improved its Fintech chops with the acquisition of a license to conduct third-party fund sales by one of its wholly owned subsidiaries.
The Shenzhen Securities Regulatory Commission gave its approval last week to Ten’an Information Technology (Shenzhen) Co., Ltd. (腾安信息科技（深圳）有限公司) engaging in securities investment fund sales operations, as well as the company’s name change to “Ten’an Fund Sales (Shenzhen) Co., Ltd. (腾安基金销售（深圳）有限公司).
Ten’an is a fully owned subsidiary of Tencent that was established on 3 January 2017, and is responsible for running the company’s highly renowned wealth management platform Licaitong (理财通) (qian.qq.com)
Prior to the issuance of the license the chief means employed by the wealth management platform to sell funds involved providing links to either fund firms or third-party fund sales agencies.
Clients could also use Licaitong to purchase funds via HowBuy Wealth Management (好买财富), a third-party fund sales entity in which Tencent is the biggest shareholder, with 25.69% equity stake.
According to funds sector analysts however, Tencent’s establishment of its own wholly owned fund sales company has undoubted advantages compared to acquiring an equity stake in a third-party fund sales entity when it comes to establishing a foothold in the sector.
“Against a background of tightening regulation, the establishment of a wholly owned third-party fund sales company better suits regulatory requirements…Alibaba, Baidu and Tencent all prefer to establish their own wholly owned or share-controlled companies, as it makes it easier to control the entire situation,” said one executive from the e-commerce department of a funds company to stcn.com.
According to the executive Tencent’s use of HowBuy was merely a temporary expedient until its own wholly owned subsidiary could obtain proper licensing.
“Tencent attempted to team up with Hillhouse Capital Group in 2015 to establish a publicly offered fund, so we can see that Tencent has long had ambitions for the publicly offered funds sector, and grabbing a fund sales license is a part of its long-term plan.”
China’s Internet giants are all vying against each other for domination of the country’s burgeoning Fintech sector, with Tencent already making forays into payments, banking, wealth management, insurance, securities and micro-loans, yet currently lacking a publicly offered funds license.
The new license is expected to give a boost to fund sales via Licaitong, which has access to the more than 980 million active users of Tencent’s instant messaging tool WeChat.