SSgA seeks to pull back from China JV

12 June 2014   Category: News, Asia, China, Global, United Kingdom   By Hui Ching-hoo

US asset management juggernaut State Street Global Advisors (SSgA) is reportedly looking to offload its entire 49% stake in its Mainland joint venture (JV), SSGA Fund Management Co Ltd (SSGAFM), according to a report from Finance and Investment News.

SSgA would be the second foreign asset manager to withdraw from a Chinese JV in quick succession after BNY Mellon agreed to sell its stake in BNY Mellon Western Fund Management to Shanghai Leadbank Asset Management in May.

State Street Group established its first Chinese office in Beijing in 2005, and was granted a branch licence from the China Banking Regulatory Commission (CBRC) in 2011.

In June 2013, SSgA teamed up with Zhongrong International Trust Co (ZRT) to form SSGAFM  with a registered capital of 300 million RMB (US$48 million).

However, its general manager Li Xuesong quit the firm just three months after establishment. The JV has been inactive in terms of launching new products, only issuing one mutual fund since its inception.

SSgA’s spokesperson could not be reached for comment on the possible divestment.   

Ronald Wan, chief China adviser at Asian Capital Holdings, told Asia Asset Management that a number of Sino-foreign financial JVs are struggling because of differences in expectations, operation, and culture.

“Apart from below par track records, foreign companies decide to part with their local partners because they will be able to make use of the soon-to-be-launched Shanghai/Hong Kong Stock Connect to distribute their products in the territory,” he added.

SSGAFM is not the first project for State Street in China. The group also has a wholly-owned technology company, State Street Technology (Zhejiang) Co in Hangzhou, Zhejiang province. The company is engaged in research and information technology for financial services worldwide.