CHINA - Prudential has received approval from the China Securities Regulatory Commission (CSRC) to set up a new fund management joint venture in China to be called CITIC Prudential Fund Management Company.
Headquartered in Shanghai, the formation of a fund management operation would accelerate the expansion into China by Prudential, which has already become one of the largest foreign insurance groups operating in the country.
The UK insurer will offer retail investment products nationwide. The move complements Prudential's existing life assurance joint venture with CITIC, which has licences to sell life assurance products in 10 Chinese cities as well as a national licence to sell policies to groups of individuals in small and medium enterprises. It would also provide Prudential with its ninth Asian fund management business.
However, it would be entering the fund management sector at a time of fierce competition between a rapidly growing number of companies and continued uncertainty about the prospects for China’s capital markets.
There are already 43 fund managers in China, with 11 new companies founded so far this year. Among that number, 15 are joint ventures that include a foreign partner. Prudential and CITIC will be the two primary shareholders and hold equal stakes in the new joint venture with the balance held by China-Singapore Suzhou Industrial Park Venture Company and Suzhou New District Economic Development Group.
Mark Norbom, Chief Executive Prudential Corporation Asia, said:
“With the strong support of our partner CITIC we already have an enviable life insurance business in China and our new funds management operation underlines our continued commitment.” Analysts say that although some of the foreign fund managers that were first to arrive are in a relatively strong position, it has become increasingly hard to raise new funds, especially for investments in equities. The Shanghai composite index, which fell 15 percent last year, is 8 percent down this year.
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