JPMorgan to shell out $1 billion for full ownership of CIFM

JPMorgan’s asset management business is to buy the 49% stake in CIFM to tap into the country’s growing affluent finance sector.



JPMorgan Chase & Co. will have to pay a pricey premium to become the first foreign company to fully own a mutual fund business in China. The New York-based banking group would have to pay 7 billion Yuan ($1 billion) to buy the remaining 49 percent of China International Fund Management (CIFM), according to a statement released on Tuesday on the Shanghai United Asset and Equity Exchange.

A wave of reforms in the country’s growing investment industry has attracted some of the world’s biggest financial businesses.

The JPMorgan Chase & Co. headquarters on Park Avenue in New York, NY

The price represents a premium of more than 50 percent compared with a recent valuation of the company, which JPMorgan said it would fully consolidate.

The Great Wall

On January 1, 2020, China imposed a new Foreign Investment Law (FIL), a landmark legislation aimed to further open its market for foreign investors and to ensure that foreign enterprises participate in market competition on an equal basis.

The relaxation aimed to attract more foreign participation in the financial sector. The decision was made in response to the trade war with the U.S.

In April, JPMorgan announced plans to buy out its partner in a move it said would fortify its capabilities in the Chinese market. BlackRock and Neuberger Berman followed its footsteps by setting up mutual fund businesses in China.

Global asset management firms are keen to capitalize on China’s $45 trillion financial market, with companies like Goldman Sachs Group, UBS Group AG, and JPMorgan adding more staff and expanding across all directions, from brokerages and futures to asset management.

China has also become a hot destination for wealth management firms as Chinese households are sitting on investable assets worth $13 trillion.

JPMorgan Asset Management, which owns 51% of CIFM, in April formed an agreement with its Chinese partner, Shanghai International Trust Co., for 100% ownership of the fund venture.

Last December, JPMorgan won Chinese regulatory approval to establish a majority-owned securities venture. In June, it received the green light for China’s first fully foreign-owned future business.

The relaxation was part of a move to allow more foreign participation in the financial sector, partly in response to the trade war with the US. Last year officials brought forward the timeline for full foreign ownership of securities, futures and fund management companies to 2020.

Christy Gren
Christy Gren is an Industry Specialist Reporter at Industry Leaders Magazine she enjoys writing about Unicorns, Silicon Valley, Startups, Business Leaders and Innovators. Her articles provide an insight about the Power Players in the field of Technology, Auto, Manufacturing, and F&B.

Recent Posts

Who is Parag Agrawal, Twitter’s new CEO?

Who is Parag Agrawal, Twitter’s new CEO?

Indian-born Parag Agrawal took over as the CEO of Twitter as co-founder Jack Dorsey stepped down for the second time in his career. Agrawal is the fourth person to take the reins a
4 hours ago
Goldman Sachs rolls out paid leave for pregnancy loss

Goldman Sachs rolls out paid leave for pregnancy loss

Goldman employees are now eligible for 20 days of paid leave for a miscarriage or stillbirth. The investment banking giant is also increasing its retirement fund matching contribut
5 hours ago
Boom in Tech IPOs in 2021

Boom in Tech IPOs in 2021

The big tech cloud-based software companies such as Zoom, Snowflake, Asana, Airbnb, Amazon, Salesforce and Palantir have all witnessed a rise in stock prices as work from home and
24 hours ago
Walmart is Shopping for a New CFO

Walmart is Shopping for a New CFO

Walmart Inc. announced that they are looking for a new chief financial officer to replace Brett Biggs, who will begin transitioning from Walmart this year, after 22 years with the
1 day ago
Petrobras of Brazil Revises Expenditure on Oil Exploration and Production to $68 Billion

Petrobras of Brazil Revises Expenditure on Oil Exploration and Production to $68 Billion

“As long as there is a need, Petrobras will be [there] because of its efficiency and low carbon content,” Joaquim Silva e Luna, chief executive, Petrobras.
2 days ago
IPOs Stumbling in Face of High Valuations

IPOs Stumbling in Face of High Valuations

More than half of the companies that raised more than $1 billion for initial public offerings are now trading way below their listing price.
2 days ago