China Merchants Fund transforms from cross-border JV to 100% domestic entity
22 August 2013
News, Asia, China, Global
By Hui Ching-hoo
China Merchants Fund has become the first Mainland joint venture asset manager to transform back into a 100% domestically-owned entity after its foreign partner ING Asset Management agreed to transfer its entire stake in the firm to units of China Merchants Group.
China Merchants Fund said in a statement on Wednesday (August 21) that ING Asset Management transferred a 21.6% stake to China Merchants Bank and an 11.7% stake to China Merchants Securities. The pricing of the stakes was undisclosed at the time of publishing.
Upon completion of the transactions, China Merchants Bank and China Merchants Securities will own 55% and 45% stakes in China Merchants Fund, respectively.
The move comes after the China Securities Regulatory Commission (CSRC) unveiled the ‘Measures for the Administration of Securities Investment Fund Management Companies’ late last year. The measures remove restrictions that barred major shareholders from owning more than a 49% stake in any asset management company.
ING group has been divesting its insurance and investment management businesses in Asia amid an ongoing decline in its business in the region. In July, the Amsterdam-based financial institution sold its investment management business in Korea to Macquarie Group.
China Merchants Fund is the 18th largest asset manager in China with total AUM of 51 billion RMB (US$8.09 billion). The company reported operating income of 315 million RMB for the first half, an increase of 14.55% year-on-year.
It is expected that increasing numbers of foreign firms participating in cross-border JVs will be bought out as upcoming mutual fund recognition between Hong Kong and China is implemented – expected by many before the end of the year.
The initiative will allow Hong Kong-domiciled funds to be distributed in China. Such cross-border networks have traditionally been achieved through cross-border JVs.
Meanwhile, newly arriving foreign asset managers will more likely seek to set up branch offices in Hong Kong rather than seeking joint ventures with Chinese firms on the Mainland.
More News >