JP Morgan Asset Management has reached a commercial agreement with joint venture partner Shanghai International Trust (Sitco) to acquire 100% ownership of their mainland venture China International Fund Management (CIFM), according to a statement from the firm last Friday.
The transaction is contingent on JPM AM completing its due diligence. The parties are not disclosing the terms of the transaction, the statement noted.
However, based on previous shareholding figures, the operation is estimated to be worth between $850m – $1bn, according to FSA. The firm declined to comment.
“After the transaction, there won’t be immediate dramatic changes in terms of existing distribution partners and investment strategies,” a source familiar with the matter told FSA.
Compared with other foreign firms establishing a new wholly foreign-owned subsidiary (WFOE) in the mainland, JPM AM’s move to acquire its joint venture partner’s stake has the advantage of amassed AUM, distribution partners and branding, the source said.
This move comes after China on 1 April lifted the investment limitation for foreign fund management firms with a mainland joint venture, allowing 100% ownership.
“We welcome China’s removal of foreign ownership restrictions, enabling us to deepen our long-term involvement with CIFM to 100% ownership, in alignment with China’s laws and regulations and with the full agreement of our joint venture partners, with whom we have worked very closely and collaboratively over the last fifteen years,” Dan Watkins, CEO in Asia-Pacific, said in the statement.
The firm and partner Sitco held several rounds of discussions on a staged equity transfer process, the statement noted.
CIFM was set up in 2004 and managed assets of around RMB 150bn ($21.2bn) as of the end of 2019, according to the statement.
Separately, JPMAM formed a strategic partnership with CMB Wealth Management, acting as a “preferred product provider” to offer access to its offshore and onshore funds in December last year.
Because China has lifted the investment limitation for foreign fund management firms, allowing 100% ownership, other foreign asset managers are taking advantage of the new policy in different ways.
For example, Blackrock and Neuberger Berman applied for wholly-owned mutual fund licenses last Wednesday, which enable foreign asset managers to sell funds to retail investors in China, FSA previously reported.