JPMorgan Chase & Co. gained full control of its China mutual fund joint venture, joining rival Manulife Financial Corp. in buying out local partners to secure full ownership of a business in the 26 trillion yuan ($3.8 trillion) market.
(Bloomberg) — JPMorgan Chase & Co. gained full control of its China mutual fund joint venture, joining rival Manulife Financial Corp. in buying out local partners to secure full ownership of a business in the 26 trillion yuan ($3.8 trillion) market.
The China Securities Regulatory Commission approved the US bank’s acquisition of a 49% stake in China International Fund Management Co. from Shanghai International Trust Co., according to a statement from the regulator on Thursday. Its asset management wholly foreign-owned enterprise set up in 2016 will also be integrated under the JPMorgan Asset Management (JPMAM) brand in China.
“Our strategic goal is to significantly grow JPMAM China to become the leading foreign asset manager in China and contribute to JPMAM becoming the leading manager of China assets to global investors,” said Asia Pacific chief executive officer of JPMorgan Asset Management Dan Watkins.
The watchdog also approved Standard Chartered Plc to set up a wholly-owned securities brokerage on Thursday, saying the London-based bank can offers services such as underwriting and asset management. The registered capital of the new brokerage stands at 1.05 billion yuan, according to a separate statement from the CSRC.
The permissions came after China quickened approvals for global firms toward the end of 2022, when Manulife’s acquisition was cleared and Fidelity International Ltd. and Neuberger Berman Group’s new units started operations. The expanding ranks of wholly foreign owned players are intensifying competition in a market embracing brightened prospects after China reversed its stringent Covid curbs.
“This is just the latest in a series of approvals for foreign groups to build and expand in China,” said Peter Alexander, managing director at Shanghai-based consultancy Z-Ben Advisors Ltd. “The China reopening trade is about much more than just investing into stocks.”
He said the flurry of approvals adds to evidence that China is serious with its commitments to open up, countering skepticism among some global firms that it’s “unsustainable.”
‘Full Force’
JPMorgan Chief Executive Officer Jamie Dimon has said that his firm is committed to bringing its “full force” to China. CIFM, set up in 2004, has been JPMorgan’s beachhead for tapping the country’s growing affluent.
CIFM oversaw about 170 billion yuan of assets as of the end of September, according to the company. The operation will be overseen by chief executive officer Eddy Wong, who will report to Watkins. The company will relocate all of its CIFM staff to JPMorgan’s office at Shanghai Tower.
JPMorgan needed to pay at least 7 billion yuan for the 49% stake, a 51% premium over the appraised value of the stake, according to a statement in 2020. The latest statement didn’t disclose a final price.
New York-based JPMorgan said in 2018 it was seeking majority control of the fund business. Manulife in November became the first global firm to win full control of a local fund business through an acquisition.
JPMorgan won control of a local securities joint venture in 2019, and raised its ownership in a futures firm to 100% in 2020. In March 2021, JPMorgan announced an investment of about 2.67 billion yuan in China Merchant Bank Co.’s asset management subsidiary, later approved by regulators in December that year.
Standard Chartered is also considering to set up a standalone wealth management unit in China to sell mutual funds to retail investors, people with knowledge of the matter told Bloomberg last year.
(Updates with details about JPMorgan’s plans in China)
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