NETHERLANDS/CHINA - ABN AMRO Asset Management is to purchase a 33% stake in Shanghai-based Xiangcai Hefeng Fund Management.
The joint venture is on course to launch a new fund in March, making ABN AMRO the first foreign investment company to take a stake in China’s A-share class market.
The sum paid for Hefeng, the asset management arm of Xiangcai Securities, the seventh largest brokerage in China, was not disclosed.
Chen Xue-Rong, chairman of Xiangcai Securities, described ABN AMRO as an excellent partner who manages to combine a global outlook with a thorough local knowledge of the 16 billion Euro domestic PRC (Peoples Republic of China) market.”
“Their technical capabilities are outstanding but, perhaps even more importantly, we feel that our joint corporate cultures and values are also well-matched, he added.
According to reports, a clash of corporate cultures led rival bank JPMorgan to call off talks with its Chinese partner, Huaan Fund Management, earlier this week.
The new joint-venture’s first task is to assist with the launch of an umbrella fund which has recently received approval from the Chinese authorities. The fund has three open-ended sub-structures including growth-, public service- and traditional stocks.
Frank Kusse, chief executive officer of ABN AMRO Asset Management Asia, said: We have completed an extensive search in the last year and found Hefeng to be by far the best partner.
“We are delighted not only to be the first to invest in an already established fund management company but to be dealing with knowledgeable, professional and entrepreneurial individuals. A team supported in turn by one of the PRC's most successful securities operations.
China joined the World Trade Organisation in 2001, after which foreign fund managers were able to take a maximum 33% stake in host companies. This limit will be lifted to 49% after three years.
ABN Amro said that it had “expressed a willingness” to increase its stake once foreign ownership limits were increased.
China’s nascent fund industry looks set to eclipse other Asian markets by 2030 when it is expected to be worth about US$350bn.
Foreign fund managers including Fortis, UBS, SGAM, Prudential, Skandia and Allianz have all made into in-roads into China through joint ventures, none of which are yet active.
The top stories this week were the High Court's decision to block the £12bn annuity transfer from Prudential to Rothesay Life, and a separate court ruling that 'raises the bar' for pension rectification exercises.
Guaranteed minimum pension (GMP) equalisation has soared to the top of pension schemes' to-do lists, with 58% stating it is a priority project, research from Equiniti has revealed.
Professional Pensions is holding its defined contribution (DC) conference on 4 September.