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HSBC signs agreement to establish joint venture fund management company in China
22 September 2004
HSBC Asset Management, through its subsidiary HSBC Asset Management (Europe) Limited, has entered into an agreement to form a joint venture fund management company in China with Shanxi Trust and Investment Corporation Limited (Jintrust).
Under the agreement, HSBC Asset Management will take up 33 per cent of the equity in the new company for a consideration of RMB66 million (approximately US$8 million). The consideration involved in the transaction, representing a capital injection by HSBC into the new company, will be met by HSBC Group internal cash resources. Jintrust will take the remaining 67 per cent in the joint venture company. HSBC, however, will increase its stake in the joint venture to 49 per cent when regulations permit this level of foreign shareholding. The transaction is subject to regulatory and other approvals.
The new company will be capitalised at RMB200 million (approximately US$24.4 million), the highest paid-up capital of any fund management company in China so far.
A national operating licence will be sought for the joint venture company, which will be headquartered in Shanghai. The operating licence is expected to allow the company to have the same rights as those of a domestic fund management company. It is envisaged the joint venture company will manage retail mutual funds investing in equities and bonds in China’s domestic securities markets.
Blair Pickerell, Chief Executive Officer, Asia Pacific at HSBC Asset Management, said: “HSBC Asset Management is already a leader in the investment management field in many Asian markets including Hong Kong, Taiwan and India. HSBC also manages one of the world’s largest China funds, the HSBC Chinese Equity Fund, with US$1.3 billion under management. To develop our presence in China, we are now tying up with Jintrust, Shanxi Province’s largest non-bank financial institution which is looking to expand into China’s growing fund management industry. Our expertise in fund management, combined with the local knowledge of our new partner, make us confident that our new joint venture will be able to offer excellent investment products and services to investors on the Mainland.”
Wu Jin An, Chairman of Shanxi Trust and Investment Corporation Limited, added: “The fund management industry in China has been growing at over 50 per cent each year over the past three years, and we expect continued double digit growth over the coming decade. The key to success in this dynamic environment is to build a strong fund management company which operates to international standards and is highly professional in managing money, distributing funds and running stringent operational and risk control systems. HSBC Asset Management has unrivalled expertise in all these areas and we believe that our joint venture will be able to play a significant role in the development of the investment management industry in China in the coming years.”
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