NOAH Company Profile

We provide direct access to China’s high net worth population. With 1,098 relationship managers in 135 branch offices, our coverage network encompasses China’s most economically developed regions where its high net worth population is concentrated, including the Yangtze River Delta, the Pearl River Delta, the Bohai Rim and other regions. Through this extensive coverage network, we primarily serve three types of clients: (i) high net worth individuals, (ii) enterprises affiliated with high net worth individuals and (iii) wholesale clients, primarily local commercial banks or branches of national commercial banks that distribute wealth management products to their own clients.

We are a holding company and we primarily operate our business through our PRC subsidiaries and our variable interest entity and its subsidiaries in China. While our PRC subsidiaries conduct most of our wealth management business, we currently conduct our insurance brokerage business, asset management business and certain other restricted services in China exclusively through Noah Investment and its subsidiaries. In particular, Gopher Asset Management Co., Ltd., or Gopher Asset, a subsidiary of Noah Investment, has grown to be the core of our asset management business, having become a leading asset management company in China focused on fund of funds in private equity, real estate, hedge funds, credit products and family office business. In addition, we primarily conduct our internet finance business through Shanghai Noah Yijie Finance Technology Co., Ltd.

We generate revenues from our wealth management business primarily in the form of (1) one-time commissions, (2) recurring service fees paid by product providers or underlying corporate borrowers, (3) and sharing of performance-based income earned by fund managers of secondary market equity fund products. We generate revenues from our asset management business primarily in the form of (1) recurring service fees mainly consisting of management fees, and (2) performance-based fees from some of the funds we serve as fund manager. Such commissions and service fees paid by product providers or underlying corporate borrowers are calculated based on the value of the relevant wealth or asset management products and services we distribute or offer to our active clients, even though our active clients do not directly pay us any such commissions or fees. We deliver to our high net worth clients a continuum of value-added services before, during and after we distribute and offer wealth management products and asset management products to them.

We are a leading wealth management service provider with a focus on global wealth investment and asset allocation services for high net worth individuals and enterprises in China. We also provide internet finance services through a proprietary internet finance platform to white-collar professionals in China.

Wealth Management
Our wealth management business provides global wealth investment and asset allocation services to high net worth individuals and enterprise clients in China. Under our wealth management business, we primarily distribute fixed income products, private equity fund products, mutual fund products, private securities investment funds products, short-term financing products, public equity products and high end insurance products. Through our rigorous product selection and risk management processes, we choose products from a wide array of third-party wealth management products and asset management products.

Asset Management
Our asset management business manages and develops financial products denominated in both RMB and U.S. dollars, covering real estate funds and funds of funds, including private equity funds of funds, real estate funds of funds, secondary market equity funds of funds and fixed income funds of funds.

In 2013, we began managing and distributing funds of hedge funds, funds of fixed income funds, funds of real estate funds and fixed income funds denominated in U.S. dollars, of which we serve as the general partner through one of our subsidiaries in Hong Kong. In 2013, we also began distributing certain asset management plans sponsored by mutual fund management companies, of which we serve as the investment adviser, exercising substantial management capability. In 2014, we developed our own fund management business by launching and managing contract-based private funds, which are new forms of funds and fund of funds. Such asset management business is subject to detailed regulations and implementing policies issued by CSRC. In addition, in 2014, in response to market demands, we limited the percentage of real estate-related products we offered, gradually shifted away from residential real estate to commercial real estate in our real estate funds and funds of real estate funds, cooperated with more overseas partners, increased the number of overseas funds of funds offered (including real estate, private equity, secondary market equity and fixed income funds) and offered an increasing number of domestic secondary market equity funds of funds. In 2015, we continued to develop our real estate-related products with a focus on commercial real estate products. Additionally, to seize future market opportunity and enhance our core competence in the asset management business, we expanded our business in managing and distributing private equity funds, secondary market hedge funds of funds and quantitative funds of funds.

Internet Finance
Our internet finance business provides financial products and services through a proprietary internet finance platform to white-collar professionals in China.
Our internet finance segment, which we began reporting as a separate segment in 2014, utilizes our proprietary online platform and encompasses the following four types of services:

“Cai Fu Pai” (online platform previously known as “Yuan Gong Bao”)—We introduced this service in the second quarter of 2014. It consists of internet finance products and online technology services for white-collar professionals. These services utilize our online platform to extend the reach of our customized online platform services to the Internet. This allows our clients to access many of our personalized services on a 24-hour basis without having to schedule a meeting with one of our online platform professionals or brokers. We had 634 enterprise clients as of December 31, 2015. This platform initially provided online platform services to targeted professionals who work for our enterprise clients, and is now open to all professionals. The “Cai Fu Pai” brand is owned by Shanghai Noah Yijie Finance Technology Co., Ltd.

“Rong Yi Tong” (Small short-term loans) – Starting in November 2013, we began providing small short term loan services, for which we serve as the loan originator and assume credit risk. We include Rong Yi Tong in our internet finance segment since it benefits from synergies with other services that we offer as part of this segment and is operated by the same personnel. This service also allows us to introduce new loan products to our clients and broaden and deepen our relationships with them. Interest on loan receivables is accrued monthly in accordance with their contractual terms and recorded as accrued interest receivable.

“Ark P2P” (Online peer-to-peer lending for high net worth individuals) – For this service, we facilitate loans on a peer-to-peer basis. These loans are mainly collateralized by financial products held by the borrower. We act solely as a facilitator for these services, and do not assume credit risk or originate the loans ourselves. This was not a significant part of our overall business in 2014, and has remained at or below that level of significance in 2015 as we have shifted our focus to other business areas.

“Jintong Zhifu” (Online payment and related services) – In delivering this service, we facilitate online payment services by transferring customer data to licensed third-party online payment platforms. Applicable laws and regulations in the PRC require a payment business license to operate online payment and related services. We are in the process of applying for such payment business license, and intend to engage in providing online payments and related services after we obtain such license. In the meantime, we are cooperating with qualified and duly licensed third parties to provide such services. There is no guarantee that we will be able to obtain the requisite payment business license and may need to continue to rely on third parties when providing these services.

The services offered through our online platform are similar to some of the services offered in person at our offices, but the online services and products target white-collar professionals, rather than high net worth individuals, and do not involve personal relationship managers. The majority of the services and products transacted in 2014 were fixed income products. In 2015, we started to facilitate transactions of secondary market products and mutual fund products on the platform. Since the online platform is relatively new, it continues to evolve and expand its product offering, and generally aims to include more standardized products. We receive platform service fees from individual customers for each transaction facilitated by the online platform based on the amount transacted.