Malaysian e-payments leader TNG Digital Sdn. Bhd. is one regulatory hurdle away from launching a local version of Yu'ebao, the cash management offering that opened an era of smartphone investing for Chinese consumers in May 2013.
Once the Securities Commission Malaysia grants its approval, hopefully by March, "we are ready to go," said Munirah Khairuddin, CEO of Malaysia with Kuala Lumpur-based Principal Asset Management Bhd.
Principal Global Investors and Kuala Lumpur-based financial conglomerate CIMB Group Holdings Bhd. own 60% and 40%, respectively, of Principal Asset Management. CIMB, in turn, holds a majority 51% stake in TNG Digital, whose e-payment services are actively used by roughly half of Malaysia's 31 million people for daily transactions, including tolls, taxis, parking, outside meals and retail purchases. Ant Group, the Hangzhou, China-based e-payments giant and parent of Yu'ebao, holds the remaining 49%.
TNG's cash management product — for which Principal Asset Management will be the sole manager — will offer its e-wallet customers the same combination of convenience and superior returns over bank deposits that made Yu'ebao an overnight sensation in China, with assets surging at one point to more than $260 billion.
Even after a number of interest rate cuts over the past year, money market yields of anywhere from 1.5% to more than 2% offer Malaysians far better returns on their spare cash than they're able to earn on current account balances, Ms. Munirah noted.
But Malaysia can't simply copy Ant's formula in China — which saw Yu'ebao quickly become a stand-alone cash cow even as Ant pushed ahead with longer-term plans to expand the range of financial products offered to its hundreds of millions of daily active users.
Since mid-2018, Yu'ebao money market fund assets managed by Ant's Tianhong Asset Management subsidiary have declined after Ant, responding to regulatory concerns, allowed third-party managers — 24 of them as of June — to offer money market funds under the Yu'ebao umbrella. Principal has a joint venture with China Construction Bank, and CCB-Principal is one of the 24 third-party managers of Yu'ebao assets.
As of June 30, Yu'ebao assets managed by Tianhong combined with assets in strategies overseen by third-party managers on Ant's digital platform came to 4.1 trillion yuan ($579 billion), up 36% from the year before, according to the prospectus Ant issued in October for an initial public offering that was subsequently aborted.