Caixin
Aug 27, 2020 02:55 AM
FINANCE

JPMorgan to Take Over China Venture for $1 Billion

JPMorgan owns the remaining 51% of China International Fund Management
JPMorgan owns the remaining 51% of China International Fund Management

JPMorgan Chase & Co. will have to pay about $1 billion to take full control of its mutual fund joint venture in China as the U.S. banking giant moves to further tap the country’s $45 trillion financial market.

Shanghai International Trust Co., the Chinese partner of JPMorgan, announced the sale of its 49% stake in China International Fund Management Co. for 7 billion yuan ($1 billion), according to deal information published Tuesday by the Shanghai United Assets and Equity Exchange. The asking price represents a 51% premium over the appraised value of the stake.

JPMorgan owns the remaining 51% of China International Fund Management, which oversees about 150 billion yuan of assets. The U.S. company said in April that it reached a preliminary agreement with Shanghai International Trust to take over the Shanghai venture, making it the first fully foreign-owned mutual fund business in China.

JPMorgan is among global financial institutions that stepped up their investments in the China market after authorities agreed to gradually scrap limits on foreign ownership of financial service businesses. In June, the company won approval from China’s securities regulator to operate the country’s first fully foreign-owned futures business by increasing its 49% stake in a futures joint venture to 100%.

Chinese regulators removed the cap on foreign ownership of local securities brokerages and fund management companies April 1 as part of its phase one trade deal with the U.S. American asset management companies BlackRock Inc. and Neuberger Berman Group earlier submitted separate applications to the China Securities and Regulatory Commission to set up new fully owned businesses in the country.

Caixin learned that JPMorgan increased its stake in China International Fund Management from 49% to 51% in early August. The U.S. bank paid 241 million yuan to Shanghai International Trust for the additional 2% stake, representing a 33% premium.

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bobsimison@caixin.com).

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