Invesco preps for China JV majority stake

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Separately, the Chinese joint venture firm saw $14bn flow into its money market fund since it joined Ant Financial’s online wealth management platform last year.

US-based Invesco is seeking to gain a majority stake in Shenzhen-based Invesco Great Wall Fund Management, according to Invesco’s quarterly results report.

Invesco and China-based Great Wall Securities each own 49% of the joint venture, while Kailuan Group and Dalian Shide Group each have 1% each.

“Given the company’s influence on Invesco Great Wall, a change in regulation allowing increased foreign ownership and reaching agreement in principle in the third quarter of 2018 to obtain a majority stake of the joint venture, the company began reporting 100% of the flows and AUM for Invesco Great Wall beginning in the third quarter of 2018,” the US firm said in the report.

FSA sought more information from Invesco, but a Hong Kong-based company spokesman said that the firm has nothing to add at this point.

In April last year, China’s securities regulator relaxed joint venture ownership limits for foreign asset managers. Foreign players can now apply for up to 51% ownership in a Chinese fund management firm. In addition, the regulator also plans to remove the 51% cap by 2021, allowing foreign firms 100% ownership of domestic asset managers.

Most recently, it was reported that JP Morgan Asset Management may become the first foreign firm to own a majority stake in a Chinese asset manager, after its joint venture partner Shanghai International Trust said it would auction 2% of its holding in China International Fund Management. A sale to the US asset manager would lift its stake to 51%.

Huge AUM jump

Separately, Invesco noted in its quarterly report that the joint venture’s quarterly average AUM ending March 2019 increased to $31.5bn, which compares to the quarterly average of $9.8bn during the same period last year.

Part of that huge increase came from the Invesco Great Wall Jingyi Money Market Fund, which was selected as one of the seven money market funds to be included in Ant Financial’s wealth management platform, Yue Bao, which allows Alipay users to transfer money to the funds available on the platform.

Since the Jingyi Money Market Fund joined the platform in June last year, its assets grew to RMB 97.32bn ($14bn) as of the end of March from RMB 22bn ($3.18bn), according to data provided by the Invesco spokesman.

Yue Bao started as a single online money market fund managed by Tianhong Asset Management, which became the largest money market fund in the world, until Ant Financial decided early last year to add more funds, according to media reports.

The decision came as regulators became more concerned with the potential risks posed by the size of Tianhong AM’s fund.

 

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