Warburg Pincus Weighs Buying Everbright Bank Wealth Unit Stake

(Bloomberg) -- Warburg Pincus is in talks to buy a minority stake in China Everbright Bank Co.’s wealth management unit, according to people familiar with the matter.

The Beijing-based bank is holding discussions with potential investors, including the U.S. private equity firm, for a deal that could value the stake at about $300 million to $400 million, the people said, asking not to be named as the matter is private. A transaction could value China Everbright Wealth Management at about $1.5 billion to $2 billion, one of the people said.

Deliberations are ongoing and scrutiny from regulators could derail a potential transaction, the people said. Details of the stake sale such as size and investors could also still change, they said. A Warburg Pincus representative declined to comment, while an Everbright representative didn’t immediately respond to a request for comment.

Everbright Bank planned to introduce strategic investors to Everbright Wealth Management, according to an announcement to the Shanghai exchange in May. Everbright would sell a stake of no more than 20% in the unit to two investors, or no more than 15% to a single investor, the announcement showed.

The potential deal comes as China continues to open its $54 trillion financial market, with the likes of JPMorgan Chase & Co., Goldman Sachs Group Inc. and UBS Group AG expanding their footprint in everything from investment banking to asset management.

Bank of America Corp. plans to set up a securities firm in China early next year, Bloomberg News reported this month. JPMorgan is investing 2.67 billion yuan ($418 million) in China Merchants Bank Co.’s wealth management unit to win market share and boost its client base in the world’s most populous country.

Everbright Bank manages over 2 trillion yuan worth of retail clients’ assets as of June 30, 2021, according to its interim report. The wealth unit, established in 2019 with 5 billion yuan of registered capital, earned a profit of 691 million yuan in the first half.

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With assistance from Bloomberg