Power Electricity Corp.’s (POW-T) sustainable investment unit has closed its investment management office in Shanghai in order to reallocate capital to more profitable businesses.
Power Corp. spokesman Stephen Lemay confirmed Thursday that Power Sustainable recently closed its Shanghai office, which had a “relatively small” staff and oversaw the Power Sustainable China fund. The closure comes after Power Sustainable announced earlier this month that it would exit its China-listed equity strategy, with just over $715 million in assets, at the end of 2023.
Power Sustainable China Investments managed the open-ended fund and assets on behalf of its clients through separate investment management agreements. The fund’s growth strategy was focused on raising capital from third parties.
But the bulk of those assets — about $500 million — were Power Corporation’s own investments, as the fund received little support from third-party investors.
Power Sustainable has “restructured” its strategy and liquidated its Power Sustainable China portfolio, according to Power Corp.’s latest corporate filing. The investments managed through its China public equity strategy are being held in cash and will be returned to investors, the company said in the filing.
Since taking over as Power Corp.’s chief executive officer in 2019, Jeffrey Ohl has been revealing his plans to investors.
“Power Sustainable is focused on growing its alternative asset management business primarily through third-party fundraising and will reallocate resources to other strategies better suited to raise capital and meet investor needs,” the company said in a recent earnings call.
The strategic shift comes as several other Western investment fund managers struggle to gain traction in the region. At a conference in Shanghai this week, JPMorgan Chase & Co. Chief Executive Jamie Dimon told an audience that the U.S. investment bank has grown in China but has found it tough after some investment-banking businesses have fallen sharply over the past few years.
But Power Corp.’s LeMay said the company is “optimistic about China’s future prospects and economic growth.”
The company will continue to He said Power Group invests in the mainland China stock market through a Qualified Foreign Institutional Investor (QFII) license. Power Group companies also continue to invest in China through a 27.8% strategic investment by subsidiary IGM Financial in China Asset Management Corp, China’s second-largest mutual fund company based in Beijing.
Power Corporation executives said in the earnings call that the company will continue to seek capital allocation opportunities consistent with its strategy to “maximize value and achieve its margin objectives.”
Power Sustainable is a climate-focused strategy that managed approximately $3.8 billion as of March 31. The firm aims to provide institutional investors with profitable returns along with environmental outcomes using multiple investment strategies. In addition to the now-defunct China fund, Power Sustainable managed three other investment strategies focused on renewable energy, agri-food companies, and its newest fund, the Global High Yield Infrastructure Credit Strategy, which launched in 2023 with a focus on green infrastructure.
Earlier this month, another Power Corp. subsidiary, Great-West Lifeco, Inc., signed a deal to become a minority investor in Power Sustainable, giving it just under 20 percent of the stock on a fully diluted basis. The deal commits Great-West to investing in Power Sustainable’s investment funds over the next several years.
With files from Reuters
