SHANGHAI (Reuters) – Hywin Holdings Ltd, which provides wealth management services in China, will aim to reduce its reliance on real estate by expanding new products and growing businesses offshore, chief financial officer Lawrence Lok said on Wednesday.
Hywin, which derives most of its revenues from distributing real estate products, including those investing in projects from China Evergrande Group, will focus on new offerings such as privately-raised securities products.
“We need to follow the Chinese government’s directions and policy guidance, when we strategise our product directions,” Lok told Reuters in an interview.
Reducing the level of exposure to real estate is “inevitable, but it will be a process over time.”
China has launched tough measures to wean the real estate sector from excessive debt, squeezing developers.
Evergrande, China’s most indebted property developer, has been scrambling to raise funds it needs to pay its many lenders and suppliers, amid deepening investor concerns of default.
“There’s a lot of speculation and uncertainties around this particular developer and that’s inevitable,” Lok said, adding Evergrande is just one of many institutions Hywin partners with.
“We are always on the watch for any risk that’s inherent in the products on our shelves.”
Hywin will help investors understand the risks in real estate products in a transparent way as “there are underlying assets that people can actually go and see,” said the former Citigroup banker, who was appointed as CFO last month.
The risk is also limited by the fact that the government has various goals, including deleveraging and maintaining financial stability, he said.
Hywin’s net income jumped 111.1% to 62.1 million yuan ($9.61 million) in the three months to June 30, while revenue rose 43%. The number of active clients increased 17.6% to 29,094.
Hywin is also expanding its geographic footprint, having set up a family office in Hong Kong. Many wealthy Chinese keep their money offshore, and “we believe we can tap into that client base quite effectively,” Lok said.
($1 = 6.4605 Chinese yuan renminbi)
(Reporting by Samuel Shen and Andrew Galbraith; Editing by Mike Harrison)