JPMAM intends to invest about RMB 2.67bn ($410m) in China Merchant Bank’s asset management subsidiary, CMB Wealth Management, for a 10% equity stake, according to a joint statement by the firms late on Friday.
The transaction, which is subject to approval by the China Banking and Insurance Regulatory Commission (CBIRC), builds upon the partnership announced in 2019, under which JPMAM and CMB agreed to collaborate on product development and investor education, with JPMAM as a “preferred product provider”.
“Investing directly into CMBWM by taking a 10% stake, we believe is a strategic and efficient way to accelerate our cooperation. It’s also a natural extension of the strategic partnership we announced in 2019, and builds on the product and distribution momentum that we’ve already established together,” a spokeswoman told FSA.
Last year the firms worked together to launch a China income strategy, and they intend to design and distribute fixed income, multi-asset and target-date funds, according to the statement.
“We will contribute to joint product development and design, share our investment management knowledge, and collaborate on asset management operational best practices and we will share international expertise with CMBWM,” said the spokeswoman
“We also plan to have a joint focus on investor education, drawing on JPMAM’s strengths such as our existing ‘market insights’ programme, to better help Chinese investors to achieve their long-term financial goals,” she said.
“This expanded strategic partnership with CMB aligns with China’s financial market reforms, which encourage market opening-up and collaboration between banks and foreign asset managers on the design and management of investment product mandates,” she added.
CHINA STRATEGIES
JPMAM’s approach to tapping into China’s wealth management industry contrasts with the joint venture route that rival overseas asset managers have taken since the CBRIC introduced its new wealth management framework in 2019.
Most recently, Schroders received regulatory approval to establish a wealth management joint venture in Shanghai with BOCOM Wealth Management last month, taking a 51% stake in Schroder Bank of Communications Wealth Management.
Amundi BOC Wealth Management formed the first joint venture under the framework in December 2019, and the combined forces of Temasek and Blackrock received the go-ahead to set up a joint venture with China Construction Bank in August 2020. Julius Baer also has plans to establish a majority-owned joint venture in China.
However, “rather than formulating a separate new joint venture entity with CMBWM, this strategic investment uniquely and directly connects us to accelerating our co-operation with CMBWM’s already established product and distribution momentum,” said Dan Watkins, chief executive officer, Asia Pacific, JPMAM, in the statement.
CMBWM, a wholly-owned subsidiary of CMB, was incorporated in Shenzhen in November 2019 with a registered capital of RMB 5bn. It specialises in launching public and private wealth management products and providing financial advisory and consulting service.
China Merchants Bank (CMB) was founded in Shekou Industrial Zone of Shenzhen in 1987 and is China’s first joint-stock commercial bank wholly owned by corporate legal entities.
JPMAM, which has global AUM of $2.3trn, according to the statement, is also pending regulatory approval for 100% ownership of China International Fund Management (CIFM). In August 2019, it became the first foreign company to hold a majority stake in a Chinese mutual fund business, when it paid $35m for an additional 2% stake in CIFM, a joint venture it had originally set-up with Shanghai International Trust in 2004.
Headquartered in Shanghai, CIFM employs around 300 staff and has $27bn of AUM, as of December 2020, according to JPMAM.
