JPMorgan's asset management arm has won an auction tohold a majority equity stake in its Chinese asset management joint venture (JV), making it the first foreign company to take control of a China-based fund management company.
JPMorgan confirmed that it had the winning bid for 2% of China International Fund Management, a joint venture between the bank and its local partner. It currently owns 49%.
JPMorgan paid 241.3 million yuan ($34.3mn) for the additional stake, the minimum bid price set by its partner, according to data from the Shanghai United Assets and Equity Exchange.
We are looking forward to the next steps to proceed with this acquisition, working closely with our joint venture partners"
"We are looking forward to the next steps to proceed with this acquisition, working closely with our joint venture partners," Dan Watkins, Asia Pacific CEO of J.P. Morgan Asset Management, said. "Once completed, the deal will be contingent on the approval of regulators in the US and China."
Earlier this month, Morgan Stanley moved close to taking a controlling stake in its Chinese securities joint venture by acquiring a 2% stake from partner Huaxin Securities. The companies signed an equity transfer contract on Aug. 1 which will increase Morgan Stanley's holding in Morgan Stanley Huaxin Securities from 49% to 51%.
The move comes against the backdrop of a rapid escalation in the U.S.-China trade conflict, with Washington designating Beijing a currency manipulator and president Donald Trump vowing to impose 10% tariffs on the remaining $300 billion of Chinese imports from Sept. 1.
Under rule changes unveiled by China in 2017, foreign asset managers were allowed to own up to 51% of their Chinese mutual fund ventures. Beijing later said foreign ownership caps would be removed by 2020, a year earlier than scheduled.
International banks are eying China, where 1.4 billion citizens had investible financial assets of $20trn in 2018, according to PwC. That number is expected to grow to $26trn by the end of 2020.