JPMorgan Takes Full Control of Chinese Mutual Fund Joint Venture
JPMorgan Takes Full Control of Chinese Mutual Fund Joint Venture
(Bloomberg) --
JPMorgan Chase & Co. agreed to buy out its local partner to get full control of a Chinese mutual fund joint venture, taking advantage of the latest move by Beijing to open up the nation’s asset management and securities businesses to foreign firms.
The U.S. bank is buying a 49% stake held by Shanghai International Trust Co. to take full ownership of the venture, known as China International Fund Management Co., according to a statement Friday. The bank didn’t disclose the purchase price.
JPMorgan is the first among a raft of asset managers seeking full control of their mutual fund operations after China’s trillion dollar market opened wider this week. Starting April 1, foreign firms can set up their own money management firms and investment banks for the first time, or seek to buy out their local partners.
“As we advance our onshore business in this critically important market, we look forward to continuing to meet the evolving needs of Chinese and international investors,” Paul Bateman, chairman of J.P. Morgan Asset Management, said in a statement.
Morgan Stanley and Goldman Sachs Group Inc. were granted approvals last Friday to take control of their securities joint ventures as policy makers push ahead with the opening of the nation’s $45 trillion finance industry. Goldman has said it plans to eventually own 100% of its securities business.
CIFM, a 15-year-plus partnership, has been JPMorgan’s beachhead for tapping the country’s growing affluent, with assets overseen by retail public funds alone projected to reach $3.4 trillion by 2023, according to Deloitte LLP.
The money manager offers a range of fund products from equities, bonds, retirement investment options and exchange traded and money-market funds. It also allows investors to tap oversees investments through the Qualified Domestic Institutional Investors program. CIFM managed 150 billion yuan ($21 billion) of assets and served nearly 41.6 million individuals and institutions as of the end of last year, according to its website.
JPMorgan is also pursuing other options to tap the growing wealth management market. It set up a strategic partnership with China Merchants Bank last year, making it a preferred product provider to the Chinese lender’s asset management subsidiary.
Other companies seeking to expand in the mutual fund space in China include BlackRock Inc. and Vanguard Group Inc. BlackRock, the world’s biggest money manager, is applying for a mutual fund license with China’s securities regulators, according to a filing this week.
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