Shanghai International Trust Co. has set an opening price of 241.3 million yuan ($35.1 million) for a 2% increment of its stake in Shanghai-based China International Fund Management — the start of a public bidding process that's likely to conclude with joint venture partner J.P. Morgan Asset Management becoming the first foreign firm to take a controlling stake in a mainland fund management company.
Under Chinese regulations, a public bidding process is required for 49% owner JPMAM — which has publicly expressed its interest in acquiring a majority stake in the joint venture — to acquire an additional 2% stake from 51% shareholder SITCO.
Documents released Monday on the Shanghai United Asset and Equity Exchange, where the bidding process is being conducted, showed the asking price set by SITCO at 241.3 million yuan, with bidding set to continue through July 26.
A note on the latest developments by Z-ben Advisors, a Shanghai-based consulting firm focused on financial sector opportunities on the mainland, said that the opening price for SITCO's 2% stake values the fund management joint venture at $1.8 billion, a 33% premium to the roughly $1.3 billion valuation included in the information released on the exchange.
Z-ben, while noting that the information released thus far is only one data point in an ongoing process, predicted that 33% premium will set a benchmark that will "more than likely be applied to pricing the control premium across a number of upcoming transactions."
A J.P. Morgan spokeswoman declined to comment.