The US bank will have to spend $ 1 billion to take control of its entire fund management joint venture in China. The huge and growing Chinese market is arousing the greed of many managers.
Large asset managers are not looking to spend to find a place in the huge Chinese market. To acquire the 49% of its local fund management joint venture that it does not yet own, JPMorgan will have to spend at least $ 1 billion, a premium of more than 50% compared to the estimated value of this stake. . At this price, the American bank should be the first foreign company to own the entire capital of an asset management subsidiary in China, a possibility open since April 1 following the easing of regulations at the end of 2019. .
Its Chinese partner, Shanghai International Trust, recently indicated that it had agreed to sell its stake in the management company China International Fund Management (CIFM), revealing the asking price. JPMorgan had indicated last April to have reached an agreement for the acquisition of this stake, but without specifying the price. Last year, the American bank had already had to pay a premium of 33% to become the majority in the joint venture which has approximately 150 billion yuan in assets (21 billion dollars).
16,000 billion dollars in assets
The acceleration of the opening of Chinese financial markets to foreign players comes even as tensions between China and the United States remain high. But it represents an irresistible opportunity for the management giants. In mid-2019, outstanding amounts stood at $ 16 trillion, according to an estimate from consulting firm Oliver Wyman, which expects the market to double in size by 2023. To tackle it, the major players in finance are multiplying the entry points. In addition to CIFM, created 15 years ago, JPMorgan recently obtained the authorization to take full control of its joint venture specializing in futures contracts, as well as to launch a brokerage subsidiary at the start of the year.
The opening of the Chinese market whets the appetites of managers
Amundi and BlackRock in line
This strategy is also followed by other asset managers. BlackRock thus obtained at the beginning of the week the authorization to launch a joint venture with the Singaporean sovereign wealth fund Temasek and the China Construction Bank in wealth management. The world leader in asset management also obtained authorization a few months ago to directly engage in fund management in China, via a wholly-owned subsidiary.
The French Amundi, European champion of the sector, is also in the game. The group is launching its second joint venture in the country, with the wealth management subsidiary of Bank of China. Amundi will hold the majority of the shares. He currently only owns 33% of his other Chinese joint venture, created in 2008 with the Agricultural Bank of China, which specializes in fund management.
China, a new eldorado for asset managers