Chinese wealth manager Noah Holdings is expanding its Hong Kong office as a mark of confidence in its business in the city, despite reporting a drop in revenue earlier this year.
In addition, the firm is also considering offshore collaborations with external asset managers (EAMs) in the region and plans to rebrand its offshore business later this year, the firm told Asian Private Banker.
The New York and Hong Kong dual-listed firm will expand its office in Times Square, Causeway Bay, to 30,000 sq ft later this year by taking an extra floor in the same building.
Xander Yin Zhe, the newly named CEO and founder of Noah, told Asian Private Banker in Shanghai that the China onshore wealth landscape will see more reforms over the next few years, with clients’ investment preferences shifting towards more diversified portfolios.
https://asianprivatebanker.com/wp-content/uploads/2024/07/a67437c3cd974ce65c8b2a3cf3f592d2-e1721205518588.jpgXander Yin Zhe, Noah
“We will use Hong Kong and Singapore offices as the main hubs to better serve Chinese clients who already have assets offshore,” Yin said.
Yin believes that for Chinese wealth managers, Hong Kong and Singapore have become ‘must-have’ locations in recent years, rather than just ‘nice-to-haves.’ He also believes that the firm’s presence in the US puts it in a good position for technology research and investment capabilities.
Noah’s recent focus on the offshore market comes as China’s onshore wealth managers struggle to stay afloat amid a challenging market. Onshore US$1.2 billion peer Hywin Wealth recently announced it was exiting the wealth management industry and would be making a strategic transition to become a tech company.
Mapping out its offshore route, the firm is also considering collaborations with smaller EAMs, where suitable. It also plans to rebrand its offshore business, however, the new name will not be revealed until later this year.
“Noah has been growing in an organic way, instead of M&A,” Yin commented. He noted that Noah has built its brand among non-bank wealth managers but still sees huge potential and room to build out market share in China and other markets.
“We are not considering acquiring onshore rivals, but keep open-minded for offshore players,” Yin continued.
Difficult onshore environment
Onshore, the firm still faces difficulty growing client portfolios in a tough macro environment. The firm purchased its Shanghai offices in 2021 for RMB 2.2 billion (US$300 million).
“Chinese wealth managers are faced with different routes when moving from a ‘product push’ to ‘investment-driven’ approach in managing client portfolios,” Yin said. He added that the most important task for Noah is to provide comprehensive wealth management services, including insurance, investment, wealth planning and even emigration consultancy.
https://asianprivatebanker.com/wp-content/uploads/2024/07/88359c0c1c21e0fa7440aca7a904fbaa.jpgNoah’s new Shanghai office near Hongqiao airport
In 1Q24, the wealth manager saw its revenue fall by 19.2% YoY to RMB 649.5 million (US$90 million) mainly due to decreases in performance-based income generated from USD private equity products and recurring service fees generated from RMB private equity and private secondary products. Noah’s US-listed shares are trading at their lowest level for more than 10 years.
The drop comes amid a challenging time for China’s wealth managers. Many of them have suffered big liquidity issues amid a slowdown in the country’s real estate market. Noah’s New York Stock Exchange-listed shares fell 40% year-to-date.
The new CEO also pointed out that the most important task for this year is to redesign onshore and offshore portfolios.
“Offshore investments are less familiar to our offshore clients, hence we have been providing more infrastructure services for many years,” he said. Yin added that he encourages clients to have a check-up of their portfolios and form a longer-term wealth plan.
