Tesla creates new car firm in China

Tesla has registered a new electric car firm in Shanghai, as China prepares to scrap rules on capping foreign ownership of new-energy vehicle (NEV) ventures.

The new company, Tesla (Shanghai), was registered on May 10, according to a filing with the National Enterprise Credit Information Publicity System seen by Reuters.

The new company will focus on electric cars, spare parts and batteries, according to the filing.

The US car maker has been in protracted negotiations to set up its own plant in Shanghai to produce vehicles locally, helping bolster its position in the country's fast-growing market for electric cars and to avoid high import tariffs.

It was not clear if the new firm was related to the anticipated Shanghai plant.

"We don't have anything new to add on this registration for now," a Tesla spokeswoman said on Monday.

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New Chinese car factory revels in remoteness

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The new company, registered in south-east Shanghai within the city's free-trade zone area, lists Tesla China head Zhu Xiaotong as its legal representative and Tesla Motors HK Limited as the sole shareholder in the firm.

Tesla currently imports all the cars it sells in China from the United States. It has other wholly-owned firms registered in China focused on sales and research and development.

China has said it will scrap limits on foreign ownership of NEV ventures this year and all automotive ventures by 2022, a major policy shift in the world's top car market that has capped foreign ownership at 50 per cent for over two decades.

US firms have also been caught up in the crossfire of a bruising trade dispute between the two countries, although there are signs of a thaw in relations ahead of a second round of trade talks in Washington later this week.

Analysts have said the main beneficiaries of looser ownership rules would be NEV makers like Tesla, which has been keen to maintain control of its own plant and protect its technology rather than cede a 50 per cent share.

Tesla boss Elon Musk has previously criticised China's tough auto rules for foreign businesses, saying they created an uneven playing field.

However, earlier this month he said the firm could soon unveil the location of a Chinese gigafactory.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Tesla creates new car firm in China

Company will focus on electric cars, spare parts and batteries, according to a filing, as Beijing looks to overhaul regulations on green vehicles and wider market