May 09, 2019 (China Knowledge) - JP Morgan may soon become the first foreign company in China to hold a majority stake in the mutual funds segment should it choose to snap up an additional 2% stake its joint venture partner has put up for sale.
Under new rules set up in 2017, foreign institutions can now own up to a 51% stake in their Chinese mutual fund joint ventures, though no company has managed to do so yet.
At the moment, JP Morgan Asset Management holds a 49% stake in its China International Fund Management (CIFM) joint venture. Its partner, Shanghai International Trust which belongs to the Shanghai Pudong Development Group, owns the remaining shares.
Now, Shanghai International Trust has put up a 2% stake in CIFM for auction on the Shanghai United Assets and Equity Exchange, paving the way for JP Morgan to acquire a majority stake, which industry experts expect will be taken up by the American financial institution.
Any potential deal will be closely watched as it could potentially open the doors for other similar deals and help foreign institutions to price the premium it has to pay in order to gain control of a Chinese fund venture.
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